Agriculture Reference
In-Depth Information
bulk of his or her efforts to other areas, such as production, personnel, costs, and expansion.
Consider this example.
The sales forecasts for the Phoenix Fertilizer Company are given in
Figure 2.4
. Sales are
divided into dry and liquid fertilizer. The sales forecast is the anticipated or predetermined
course of action, i.e., the objective, of the marketing department. Sales objectives are essen-
tial in keeping the sales force focused and in allowing key executives to make remedial
decisions related to sales performance, should the agribusiness deviate from its established
objectives.
This annual sales forecast for fertilizer was developed by combining all of the individual
sales representative's estimates of sales for the coming year. Then the marketing manager
met with other key individuals, such as the executive vice president, production vice presi-
dent, new products manager, and purchasing director, to determine whether anticipated input
(costs) matched anticipated output (revenue). The committee determined that the control
program for sales would be reported on a component basis—that is, by dry and liquid ferti-
lizer sales—and on a monthly basis, with a quarterly review of other specifi c sales items to
be made as a supplement to the overall sales control program. The committee also decided
to report the sales in tons because this was the most meaningful measure for all concerned.
The executive vice president and controller agreed that the information needed could be
secured from company records. They began with lasts year's sales forecast, actual sales from
last year, and current customer sales invoicing. The offi ce manager would prepare the
monthly control information report, and it would be shared with all employees of the com-
pany, as well as with the company's banker. The sales manager was given the principal
responsibility for accomplishing the objectives of the control program.
10
8
6
6
4
Allowable deviation
2
0
Formula:
Difference
−
2
= Deviation
Sales forecast
−
4
Actual sales-April
Sales forecast-April
Difference
959,000
−
940,000
Difference
19,000
−
10
19,000
= 2% deviation
940,000
Current year
Last year
Sales forecast - Current year (1000 tons)
Jan
Feb
Mar
Apr
May
Jun
Jly
Aug
Sep
Oct
Nov
Dec
Dry fertilizer
575
690
699
690
720
751
610
590
700
700
650
630
Liquid fertilizer
252
250
244
250
220
252
270
277
240
250
255
260
Total
827
940
943
940
940
1003
880
867
940
950
905
890
Figure 2.4
Management by exception graph for Phoenix fertilizer
