Prepare Operational Budgets

Harry Cavill is the business owner of Festive Delights which manufactures and sells Christmas Baubles. Harry is excited about the upcoming Christmas period because, for the last five years, December has been the most profitable month of the year for Harry's business.

1. You work for Acute Accounting and have always provided Harry with accurate forecasting advice, so Harry trusts you with his business financials.
2. Harry and his Finance Manager, Betty Maple, have asked you to predict if sales of his Christmas Baubles will increase during the December Christmas period.
3. Harry's budget objective for December is to increase sales by 30% (compared to November). Festive Delight's policies and procedures require a monthly Budgeted Variance and Profit and Loss Statement to be prepared.

Acute Accounting requires advice provided to clients to be done in writing.

1. Use the following template to write an email to Harry and Betty to:

• Confirm the objective for sales % increase for the December Christmas period.
• Predict whether sales of Christmas Baubles will increase over the December Christmas period - explain your prediction and reasons why.
• Explain to Harry which of the four forecasting trends you have used to assist you with your prediction i.e. secular trend movement, cyclical movement, seasonal movement or irregular movement.