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Forecasting Techniques

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Task 2: Forecasting Techniques and Sources of Funds (LO2) Be able to apply forecasting techniques to obtain information for decision making Scenario 2 The manager of Sandyfoot Ltd is using the results of the recent period to forecast the revenues and costs for a forthcoming period. The results for the recent period to be used as a basis for forecasting are as follows: Activity Tennis Racquets..................3000 units Revenue.......................................£90000 (£30 each) Materials --------------------------£7000 Staff Salaries......................£8500 Utilities.............................£3500 Laundry.............................£3000 Rent.................................£5000 Other................................£2500 33500 Operating Profit.............................60500 The manager has ascertained the following information. - Prices of the tennis racquets will be increased by £15 from their recent period - Variable costs will be changed in direct proportion to the changes in quantities - All staff are paid fixed salary, while for the next period salary will be increased by 2% - The variable element of laundry cost will be increased by 60% in next period - Forecasted activity for the next period will be 3300 units of tennis racquets You are required to: 2.1 Apply forecasting techniques to make cost and revenue decisions for Sandyfoot Ltd and prepare a forecast profit statement