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Example 3
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)?
It is a past question and I need your help calculating the figures!
The answer given in the report makes it unnecessarily complicated.
When they did the budget they budgeted on their sale being 50% of the expected market sales (30.9 / 61.8 = 50%).
The actual market sales were $65M and therefore it would be reasonable for them to expect 50% x 65M = $32.5M
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