Answer to Question #68438 in Accounting for lisa

Question #68438
How does revenue forecasting affect the rest of the budget process?

What are the limitations of revenue forecasting technique?

How can this be countered?
1
Expert's answer
2017-05-27T04:27:10-0400
Forecasting revenues necessary to determine the horizon of business development. Projected revenues the possible volume of idle costs and profit.
2. Restrictions revenue forecasting methodology: uncertainty behavior distortions and costs.
3. It can be countered:
- to reduce uncertainty should use flexible budgets.
- to avoid behavioral biases budget process must reconcile with the director. This will ensure fairness budget data and contribute to the objectives of the organization. Another way - the recognition of the concept of variability and interdependence budget will assess performance.
- to reduce costs necessary to prepare the budget on a regular basis.

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