Using this method, the manager multiplies the sales forecast into various expense heads by percentages. The percentage used for each category may be based on the manager’s experience.
The expense allocation follows the direction of change in sales. e.g. if sales are forecasted to decline, then the budget allocation for all expenses heads will decrease as well.
However, the effectiveness of this method is dependent on the firm having accurate sales forecasts. Despite the limitations, the managers know that if expenses are kept within their percentage budgets, final operations will come out as planned.
Latest posts by BMS Team (see all)
- Meterdown Annual Festival is back with its 7th edition – Starts today! - January 16, 2020
- Tybms sem 6 results 2019 declared on 19th June 2019 - June 19, 2019
- TYBMS Sem 6 Results 2019 Update from BMS khabri! - June 15, 2019