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A company is preparing a sales budget. The budget planners believe that the volume of...

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Accounting

A company is preparing a sales budget. The budget planners believe that the volume of sales next year will depend on the state of the economy.
\table[[State of the economy,Sales for the year million],[No growth,40],[Low growth,50],[Higher growth,70]]
It has been estimated that there is a 60% probability of no growth, a 30% probability of low growth and a 10% probability of higher growth.
a) Advise the company on what the sales budget should be
b) Discus the usefulness or otherwise of using probabilities and expected value calculations in sales forecasting
c) Discuss the use of Spreadsheets, stress testing or 'what if' analysis in Management Accounting. (173-177)
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