Entrepreneurship and Small Business Management

Sales Projections

A sales projection is an estimate of the dollar volume or unit sales that might occur during a future time period. You can estimate a sales projection based on past sales by using a graph of past sales:

1. Construct a graph of past sales.

2. Draw a straight line from the first year of data, approximately through the "middle" of the data points, to the year for which the projection is being made.

3. Read the number or dollar value as your sales projection.

Use the following graph of Morgan's Mercantile sales to answer questions 1-9.

1.		What is the approximate sales projection for Year 10?
			A)	$7.5 million
			B)	$5.3 million
			C)	$6.2 million
			D)	$530,000
2.		What is the approximate sales projection for Year 11?
			A)	$5.0 million
			B)	$6.1 million
			C)	$7.2 million
			D)	$6.7 million
3.		What is the approximate sales projection for Year 12?
			A)	$7.1 million
			B)	$8.0 million
			C)	$6.2 million
			D)	$4.3 million
4.		What is the approximate sales projection for Year 13?
			A)	$7.0 million
			B)	$6.0 million
			C)	$7.5 million
			D)	$8.0 million
5.		What is the approximate sales projection for Year 14?
			A)	$7.5 million
			B)	$8.0 million
			C)	$6.9 million
			D)	$8.7 million
6.		What is the approximate sales projection for Year 15?
			A)	$8.3 million
			B)	$7.8 million
			C)	$8.0 million
			D)	$6.2 million
7.		What is the approximate sales projection for Year 16?
			A)	$8.3 million
			B)	$7.8 million
			C)	$9.7 million
			D)	$8.8 million
8.		Is this method of graphing sales history and drawing a line for sales projections very accurate? Why or why not?
			A)	Yes, because the graph takes all variables into account.
			B)	No, because the line only maps a current trend and cannot take into account future economic conditions, products, or competitors.
			C)	No, because the graph does not show month to month changes.
			D)	Yes, because line graphs are always accurate.
9.		Is this method of making sales projections helpful? Why or why not?
			A)	No, because it is not accurate.
			B)	No, because it does not show month to month changes.
			C)	Yes, because it is completely accurate.
			D)	Yes, because it can be used to make a rough estimate of future business.

Another method of projecting sales is called the factor method. The factor is your company's present market share. You can use federal government publications or other sources to find the total sales projected for the entire market for the following year. With your factor and the sales projection for the total market, you can make a sales projection for your business. Projected Sales = Projected Market Sales x Market-Share Factor

10.		Carlsbad Grocers have an 18% share of the market for food sales in West County. Food sales in the county for next year are estimated to be $27,300,000. What is the projected sales figure for Carlsbad Grocers in West County for next year?
			A)	$4,914,000
			B)	$3,899,325
			C)	$389,932
			D)	$14,600,000
11.		A company's market share factor is 9%. The projected market sales for next year is $6,500,000. What is the company's projected sales figure for next year?
			A)	$650,000
			B)	$585,000
			C)	$325,000
			D)	$1,200,000
12.		Lukas Lumber Distribution has a 25% share of the market in City Heights. Lumber sales in City Heights next year are estimated at $2,950,000. What is Lukas Lumber's sales projection?
			A)	$250,000
			B)	$350,000
			C)	$737,500
			D)	$650,900
13.		Shear Cheer has a 5% share of the hair styling market. Next year's hair styling earnings for the total market are $875,000. What can Shear Cheer project for their earnings next year?
			A)	$50,000
			B)	$97,200
			C)	$100,000
			D)	$43,750
14.		This year's enrollment at Central State University (CSU) accounted for 35% of all university students in the state. Next year the total university enrollment in the state is expected to be about 92,000 students. What enrollment figures can CSU project for next year?
			A)	32,200 students
			B)	35,000 students
			C)	29,000 students
			D)	38,900 students
15.		Based on past records, Primary Savings Bank determined that it has a market share of 8.7% of all the savings accounts in Weaver County. Estimated savings accounts in Weaver County for next year are 320,000. Project the number of savings accounts Primary Savings Bank will have next year.
			A)	32,000
			B)	8700
			C)	27,840
			D)	19,810
16.		The Municipal Pool has traditionally been used by 67% of the swimmers in the city of Northshire. The total estimated number of swimmers in Northshire next year is 3400. How many swimmers can the Municipal Pool expect next year?
			A)	350
			B)	2278
			C)	3184
			D)	1825
17.		This year, the total market sales for retail clothing in the Covington area was $3,750,000. Brothers Department Store had $1,405,000 in sales this year. What was Brothers Department Store's market share this year?
			A)	22.7%
			B)	68%
			C)	33.3%
			D)	37.5%
18.		In problem 17, the projected total market sales for retail clothing next year in the Covington area is $4,560,000. What can Brothers department store expect for its sales next year?
			A)	$1,900,000
			B)	$1,405,000
			C)	$1,710,000
			D)	$1,290,000
19.		Bonbon Bakery now has 13% of the market for Riverside County. The total estimated sales of the county for next year are $2,000,000. What sales volume should Bonbon Bakery project for next year?
			A)	$1,300,000
			B)	$230,000
			C)	$260,000
			D)	$26,000
20.		In problem 19, if this year's total sales in the county were $1,980,000, how much did Bonbon Bakery earn?
			A)	$198,000
			B)	$257,400
			C)	$200,000
			D)	$278,100