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A company had budgeted sales of $30.9 million within a market worth $61.8 million. When the budget was drafted, it was assumed that inflation would be 3%. After the end of the budget period, it was discovered that inflation had been 2% and that the market had been worth $65 million
What is the sales revenue figure which should be used when assessing company performance (to one decimal place)?- Topics: 53
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the market growth =.0.0621?
The budgeted sales included inflation of 3%.
Without inflation it would have been 30.9 / 1.03 = 30.
Given that the actual inflation was 2% then the would have expected sales of 30 x 1.02 = 30.6.
Similarly, had the market not grown then the actual market should have been budgeted as 61.8 / 1.03 x 1.02 = 61.2
Since the actual worth of the market was 65, then the market had grown by 6.21%
So we should expect the sales to have been 30.6 x 1.0621 = 32.5.
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thanks! its clear now
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