Entrep module 7

• Forecasting

  A tool used in planning that aims to support management or a business owner in its desire to adjust and cope up with uncertainties of the future
• Forecasting depends on data from the past and present and makes meaningful estimates on revenues and costs
• Forecasting revenues and costs is the same as weather forecasting, though forecasting revenues and costs is in the context of business
• Entrepreneur

  Uses forecasting techniques to determine events that might affect the operation of the business such as sales expectations, costs incurred in the business as well as the profit that the business is earning
• Making informed estimates reduces risks that might be experienced by the entrepreneur in the future
• Mark-up

  The amount added to the cost of a product to determine the selling price
• Forecasting

  A planning tool that helps entrepreneurs cope up with uncertainties in the future operation of the business
• Selling price

  Computed by adding cost per unit and mark-up
• Revenue

  The result when sales exceed the cost to produce goods or render services
• Forecasting

  A tool that allows managers to make educated estimates on revenue and costs of the business in order to cope up with uncertainties of the future
• Merchandise Inventory, beginning

  Goods and merchandise at the beginning of operation of business or accounting period
• Freight-in

  Amount paid to transport goods or merchandise purchased from the supplier to the buyer
• Operating expenses

  Costs incurred through payment of utilities such as electricity and water
• Purchases

  Merchandise or goods purchased
• Loss

  The result when cost to produce goods or render services is greater than the sales
• Factors affecting forecasting revenues include: the economic condition of the country, the competing businesses, the changes in the community, and the internal aspects of the business
• Mark-up formula

  Selling price = Cost + Mark-up
• Cost of Goods Sold / Cost of Sales

  Amount of merchandise or goods sold by the business for a given period of time
• Calculating Cost of Goods Sold

  1. Add beginning inventory

  2. Add Net Amount of Purchases

  3. Subtract ending inventory
• Purchases

  Merchandise or goods purchased, e.g. cost to buy each pair of Jeans or t-shirt from a supplier
• Merchandise Inventory, end

  Goods and merchandise left at the end of operation or accounting period
• Formula to compute Cost of Goods Sold for a merchandising business

  1. Merchandise Inventory, beginning

  2. Add Net Cost of Purchases

  3. Add Freight-in

  4. Subtract Merchandise Inventory, end
• Formula to compute for costs of goods sold in a merchandising business

  1. Merchandise Inventory, beginning

  2. Add: Net Cost of Purchases

  3. Freight-in

  4. Cost of Goods Available for Sale

  5. Less: Merchandise Inventory, end

  6. Cost of Goods Sold
• Projected costs incurred by the business

  • Cost of Goods Sold
  • Internet Connection
  • Utilities (Electricity)
  • Miscellaneous expense
• To calculate the total costs incurred by the business, cost of goods sold and total operating expenses are then added
• Projected Monthly Costs (Year 1)

  • Cost of Goods Sold
  • Expenses
  • Total Cost & Expenses
• Mang Eduard operates a buy and sell business. He sells umbrellas in his shop near the city mall. He gets his umbrellas from a local dealer.
• Projected Cost of Goods Sold (Daily)

  • Goods/Merchandise
  • Cost per Unit
  • Projected Volume
  • Projected Costs of Purchases (Daily)
  • Average No. of Items Sold (Daily)