Chapter 13. Sales Volume, Costs, and Profitability Analysis. PowerPoint presentation prepared by Dr. Rajiv Mehta New Jersey Institute of Technology. Chapter Outline. Framework for Sales Force Organizational Audit Sales Volume, Marketing Costs, and Profitability Analysis
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Sales Volume, Costs, and Profitability Analysis
PowerPoint presentation prepared by
Dr. Rajiv Mehta
New Jersey Institute of Technology
Source: Flying Colours Ltd.
After reading this chapter, you should be able to do the following:
Collecting, classifying, comparing, and evaluating an organization’s sales figures is a process referred to as sales volume analysis.
(a) when an order is taken, (b) when it is shipped, or (c) when the customer pays
in dollars or physical units
invoices, cash receipts, accounts receivable
sales in prior periods, the fiscal period’s sales forecast, sales quota, competitors’ sales
analysis by region, district, territory, or overall organization
by territory, product line, customer type
Hierarchical Analysis of
Sales Volume by Market Segments
Cooperation Between Marketing and Accounting Departments: Average Per Unit Sales Cost Curve for Direct Selling
average cost curve
Source: C Squared Studios
− cost of goods sold
net profit (loss)
Source: C Squared Studios
As the national sales manager for a medium-sized electrical parts manufacturer, you have a lot of pressure on you to make the company’s annual calendar year sales forecast, which is set by the CEO and the vice president of marketing with some input from you. They always push together for an ambitious sales forecast, and you feel you have no option but to go along with them. It is now the end of September and you’ve just gone over the sales data for the past three quarters. Sales are running about 10 percent behind what will be necessary to make the year’s sales forecast. Last year, you missed achieving the company sales forecast by nearly 12 percent, and you realize that your job may be in jeopardy if your sales force isn’t able to reach this year’s sales forecast. The CEO may come under fire himself from the executive board if company sales again miss forecasts, and he will most likely blame you for the failure. Normally, a sale isn’t tabulated until the product is actually shipped to the customer, but about 85 percent of all customer orders move on to the next stage and are shipped. Only about 15 percent are cancelled for various reasons. You recognize that your sales force could still make the annual sales quota if (1) salespeople are ordered to start aggressively pushing inventory onto customers and (2) you change the way a sale is booked from the date the product is shipped to the date the order is received from the customer. Before making these two decisions, you try to think through the potential pros and cons.