Question

The level of sales to the level of revenue generated is a useful parameter for mapping an organization's present and future course of action. Justify.

Answer 1

i. It helps in setting sales target.

ii. It helps in fixing the selling price and the profit goal.

iii. In a manufacturing environment, it helps in determining the products that are not contributing to meet the fixed expenses and thus brings up the item for discussion in management meetings about its continuity.