FORECASTING

THE REVENUE
OF THE
BUSINESS
Let us pray!
Good morning!
Classroom
Condition
Attendance
Continuation
FORECASTING
THE REVENUE
OF THE
BUSINESS
Table 3: The table shows an average increase of revenue every month by 5 percent except
June, July to October and December.

While the month of June has twice the increase from the previous month, 10 percent.
Let us consider that months covering July to October are considered to be Off-Peak
months, therefore sales from July to October are expected to decrease. It is assumed
that there is no increase in revenue from July to August while from August to October
the decrease in revenues is 5 percent from the previous month. Since revenues from
sales of RTW’s are considered to be seasonal, it is assumed that there is a 10 percent
increase in revenue from November to December.
 Computation for assumed increase of revenue on specific months is as
follows:

JANUARY

Projected Monthly Revenue (Increase) = Revenue (January) x 5% increase

= 102,600.00 x .05

=5,130.00

FEBRUARY

Projected Revenue = Revenue (January) + amount of increase

= 102,600.00 + 5,130.00

=107,730.00
 On the other hand, decrease in revenue is computed as follows:

AUGUST

Projected Monthly Revenue (Decrease) = Revenue (August) x 5% increase

Projected Monthly Revenue (Increase) = 144,041.14 x .05

Projected Monthly Revenue (Increase) =7,202.00

SEPTEMBER

Projected Revenue = Revenue (August) - amount of decrease

= 144,041.14 – 7,202.06

=136,839.00
 Table 3
Projected Monthly Revenue
Fashion Thrift Ready to Wear Online Selling Business

Month January February March April May June

Revenue 102,600.0 107,730.0 113,116.50 118,772.33 124,710.9 137,182.0

0 0 5 5

Month July August September October November December

Revenue 144,041.1 144,041.1 136,839.0 129,997.1 136,497.0 150,146.7

5 5 9 4 0
 Important Assumptions:

February to May Increase of 5% from previous revenue

June Increase of 10% from previous revenue

July Increase of 5% from previous revenue

August The same revenue

September to October Loss 5% from previous revenue

November Increase 5% from previous revenue

December Increase 10% from previous revenue

Forecasting
the Cost to
be Incurred
 Learning Objectives:

At the end of this lesson, the learners should be able to:

• Understand the meaning of cost in the business

• Analyze forecasting the cost to be incurred in the business.
• Calculate the projected revenue and cost of the business.
 Forecasting the Cost to be Incurred
Costs are incurred each time
revenues are generated. On the
other hand, the business also
incurs costs in its operation,
these costs are called
Operating Expenses.
Forecasting the Cost to be Incurred
●Purchases refer to the
merchandise or goods purchased.

●Merchandise Inventory, end

refers to goods and merchandise left
at the end of operation or
accounting period.
Forecasting the Cost to be Incurred
●Freight-in refers to the amount
paid to transport goods or
merchandise purchased from the
supplier to the buyer. In this
case, it is the buyer who
shoulders these costs.
 In a merchandising business such as Fashion Thrift Ready to Wear
Online Selling Business, the formula to compute for costs of goods sold
is as follows:

Merchandise Inventory, beginning ₱ XX.XX

Add: Net Cost of Purchases XX.XX

Freight – in XX.XX

Cost of Goods Available for Sale ₱ XX.XX

Less: Merchandise Inventory, end XX.XX

Cost of Goods Sold ₱ XX.XX

 LET’S DO THIS!

Let us calculate the cost of goods sold by Ms. Richie

Dizon’s online selling business for the month of January.
 Table 4: Shows the costs incurred during the first month of operation of
Fashion Thrift Ready to Wear Online Selling Business.

Table 4: Projected Cost of Goods Sold (Monthly) Fashion Thrift RTW Selling Business

Merchandise/Products Cost per unit Projected Volume Projected Cost of

Purchases
Average Number of Items (Monthly)
Sold (Monthly)
A F=D x 30 days (K)=A x F

T - shirts 90.00
300 27,000.00

Jeans 230.00
180 41,400.00
TOTAL 320.00 68,400.00
480
 Table 5: Shows how freight-in is calculated. It is assumed that on average, Ms.
Dizon pays at least 250.00 pesos for every 12 items delivered successfully by her
supplier through a courier service. Since her average order is 480 pieces every
month, she pays:

Table 5: Freight-in paid by Ms. Dizon every Month

Merchandise/Products No. of Items Sold Projected Volume Freight - in

(Daily) (January only)
Average Number of Items
Purchased (Monthly)
A F=D x 30 days (J)= (F/12) x 250

T - shirts 10 300 6,250.00

Jeans 6 180 3,750.00

TOTAL 16 480 10,000.00

 Cost of Goods Sold

Merchandise Inventory, beginning ₱ 00.00

Add: Net Cost of Purchases 68,400.00

Freight – in 10,000.00

Cost of Goods Available for Sale ₱ 78,400.00

Less: Merchandise Inventory, end 00.00

Cost of Goods Sold ₱ 78,400.00

 The operating expenses and assumed amount are presented below:

Operating Expenses

Internet Connection ₱ 1,299.00

Utilities (Electricity) 800.00

Miscellaneous Expenses 300.00

Total Operating Expenses ₱ 2,399.00

 Table 6:
Projected Monthly Costs (Year 1)
Fashion Thrift RTW Online Selling Business

Month January February March April May June

Cost of Goods 78,400.00 82,320.00 86,436.00 90,757.80 95,295.69 104,825.26

Sold
Expenses 2,399.00 2,399.00 2,399.00 2,399.00 2,399.00 2,399.00

Total Cost & 80,799.00 84,719.00 88,835.00 93,156.80 97,694.69 107,224.26

Expenses

Month July August September October November December

Cost of Goods 104,825.26 104,825.26 99,584.00 94,604.80 99,335.50 109,268.54

Sold
Expenses 2,399.00 2,399.00 2,399.00 2,399.00 2,399.00 2,399.00

Total Cost & 107,224.26 107,224.26 101,983.00 97,003.80 101,734.00 111,667.54

Expenses
 IMPORTANT ASSUMPTIONS:

COST OF GOODS SOLD

February to May Increase of 5% from previous cost

June Increase 10% from previous cost

July to August The same cost from previous month

September Loss 5% from previous cost

October Loss 5% from previous cost

November Increase 5% from previous cost

December Increase 10% from previous cost

EXPENSES The same every month

 ACTIVITY

NOW, YOUR TURN!

Directions: Now that you have learned how to compute

the projected revenue, read the following problem and
solve for the projected revenue of the business by day,
month and year.
 Situation
Aling Marites is operating a buy and sell business, she sells
broomsticks in her stall at the market in their town. She
purchases her broomsticks from a local supplier for 25.00
each. The supplier charges her 5.00 for every 5 broomsticks
delivered through a pasabuy. She wants to add 50% mark-
up on each broomstick. Everyday, Aling Marites is able to
sell 30 broomsticks in her stall. Fill in the table below by
solving the necessary projected revenues and costs.
 Table 1
Projected Daily Revenue
Merchandise / Cost per unit Mark-up ____ Selling Price Projected Projected
Products % Volume Revenue

Average (Daily)
Number of
Items Sold
(Daily)
A (B)=A x .50 (C)=A + B D (E)=C x D

TOTAL
 Table 2
Projected Monthly and Yearly Revenue

Merchandise / Selling Price Projected Projected Projected Projected

Products Volume Revenue Volume Revenue

Average (Monthly) Average (Yearly)

Number of Number of
Items Sold Items Sold
(Monthly) (Yearly)

(C)=A + B (F)= D x 30 (G)=C x F (H)=D x 365 (I)=C x H

days days

TOTAL
 Table 3
Projected Monthly Revenue

Month January February March April May June

Revenue

Month July August September October November December

Revenue

January to May Increase of 5% from previous revenue

June Increase of 10% from previous revenue Important
Assumptions
July to December The same revenue to previous months
 Table 4
Projected Cost of Goods Sold (Monthly)

Merchandise/Products Cost per unit Projected Volume Projected Cost of

Purchases
Average Number of Items (Monthly)
Sold (Monthly)
A F=D x 30 days (K)=A x F

Broomsticks

TOTAL
 Table 5
Freight-in paid by Aling Marites every Month

Merchandise/Products No. of Items Projected Volume Freight - in

Sold (January only)
(Daily) Average Number of Items
Purchased (Monthly)

A F=D x 30 days (J)= (F/12) x ?

Broomsticks

TOTAL
 Learning Objectives:

At the end of this lesson, the learners should be able to:

• Understand the meaning of cost in the business

• Analyze forecasting the cost to be incurred in the business.
• Calculate the projected revenue and cost of the business.
Let us pray!