Republic of the Philippines

Department of Education
Region XIII-CARAGA REGION
SCHOOLS DIVISION OF SURIGAO DEL SUR
CARRASCAL NATIONAL HIGH SCHOOL
Nat’l. Highway, Gamuton, Carrascal, Surigao del Sur
NAME: SECTION:
GRADE LEVEL: XII DISCIPLINE: ENTREPRENEUR AS RISK TAKER
SUBJECT AREA: ENTREPRENEURSHIP TOPIC: FORECASTING REVENUE
QUARTER: 2nd WEEK: 2

What’s in?

Revenue is a result when sales exceed the cost to produce goods or render the services. Cost on the other hand
simply refers to the amount of money used to produce or manufacture goods/merchandise as well as costs incurred in
selling the goods/merchandise. How much revenues and costs incurred in the operation of the business? How are these
projected? And how are these used to compute profit/loss of the business shall be learned in this module.
Why forecast? We often watch news as Kuya Kim reports the direction of the typhoon in the next 2 days, what
Kuya Kim is doing is giving us information taken by satellites and gives us the direction of the typhoon. In weather
forecasting, the reporter is giving us advance information that could help us prepare and be ready for upcoming
typhoon. This way, risks such as accidents, devastation of properties and loss of life may be prevented. Forecasting is a
tool used in planning that aims to support management or a business owner in its desire to adjust and cope up with
uncertainties of the future. Forecasting depend on data from the past and present and make meaningful estimates on
revenues and costs. Forecasting revenues and costs is the same as weather forecasting, though forecasting revenues
and costs is in the context of business. Entrepreneurs use forecasting techniques to determine events that might affect
the operation of the business such as sales expectations, costs incurred in the business as well as the profit that the
business is earning. Making informed estimates reduces risks that might be experienced by the entrepreneur in the
future.
Revenue is a result when sales exceed the cost to produce goods or render the services. Revenue is recognized
when earned, whether paid in cash or charged to the account of the customer. Other terms related to revenue includes
Sales and Service Income. Sales is used especially when the nature of business is merchandising or retail, while Service
Income is used to record revenues earned by rendering services.
The entrepreneur would want his/her forecasting for his/her small business as credible and as accurate as possible to
avoid complications in the future. In estimating potential revenue for the business, factors such as external and internal
factors that can affect the business must be considered. These factors should serve as basis in forecasting revenues of
the business. These factors are:
1. The economic condition of the country. When the economy grows, its growth is experienced by the consumers.
Consumers are more likely to buy products and services. The entrepreneur must be able to identify the overall health of
the economy in order to make informed estimates. A healthy economy makes good business.
2. The competing businesses or competitors. Observe how your competitors are doing business. Since you share the
same market with them, information about the number of products sold daily or the number of items they are carrying
will give you the idea as to how much your competitors are selling. This will give you a benchmark on how much
products you need to stock your business in order to cope up with the customer demand. This will also give you a better
estimate as to how much market share is available for you to exploit.
3. Changes happening in the community. Changes’ happening in the environment such as customer demographic,
lifestyle and buying behavior gives the entrepreneur a better perspective about the market. The entrepreneur should
always be keen in adapting to these changes in order to sustain the business. For example, teens usually follow popular
celebrities especially in their fashion trend. Being able to anticipate these changes allows the entrepreneur to maximize
sales potential.
4. The internal aspect of the business. Another factor that affects forecasting revenues in the business itself. Plant
capacity often plays a very important role in forecasting. For example, a “Puto” maker can only make 250 pieces of puto
every day; therefore he/she can only sell as much as 250 pieces of puto every day. The number of products
manufactured and made depends on the capacity of the plant, availability of raw materials and labour and also the
number of salespersons determines the amount of revenues earned by an entrepreneur .
Now that all factors affecting forecasting revenues are identified, you can now calculate and project potential
revenues of your chosen business. The table below shows an example of revenues forecasted in a Ready to Wear Online
Selling Business.
Example:
Ms. Fashion Nista recently opened her dream business and named Fit Mo’to Ready to Wear Online Selling
Business, an online selling business which specializes in ready to wear clothes for teens and young adults. Based on her
initial interview among several online selling businesses, the average number of t-shirts sold every day is 10 and the
average pair of fashion jeans sold every day is 6. From the information gathered, Ms. Nista projected the revenue of her
it Fit Mo’to Ready to Wear Online Selling Business.
She gets her supplies at a local RTW dealer in the city. The cost per piece of t-shirt is 90 pesos, while a pair of
fashion jeans costs 230 pesos per piece. She then adds a 50 percent mark up to every piece of RTW sold.
Mark up refers to the amount added to the cost to come up with the selling price.
The formula for getting the mark up price is as follows:
Mark Up Price = (Cost x desired mark up percentage)
Mark Up for T-shirt = (90.00 x .50)
Mark Up for T-shirt = 45.00

In calculating for the selling price, the formula is as follows:

Selling Price = Cost + Mark Up
Selling Price = 90.00 + 45.00
Selling Price for T-shirt = 135.00

Table 1 shows the projected daily revenue of Ms. Nista’s online selling business. A computation regarding the projected
revenue is presented in letters in upper case A, B, C, D, and E.
Table 1
Projected Daily Revenue
Fit Mo'to Ready to Wear Online Selling Business

Projected Projected
Volume Revenue
Table Cost per Unit Mark-up 50% Selling Price (D) (E) 2
Type of RTW's (A) (B) (C)
Average No. of
Items Sold (Daily)
(Daily)

(A) (B)= (A x .50) (C)= (A+B) (D) (E) =(C x D)

T-Shirts 90.00 45.00 135.00 10 1,350.00

Jeans 230.00 115.00 345.00 6 2,070.00

Total 320.00 160.00 480.00 16 3,420.00

shows the projected monthly and yearly revenue of Ms. Nista’s online selling business. Computations about the monthly
revenue is calculated by multiplying daily revenues by 30 days ( 1 month).
Example, in table 1 the daily revenue is 3,420.00. To get the monthly projected revenue it is multiplied by 30 days.
Therefore,
Projected Monthly Revenue = Projected daily revenue x 30 days
Projected Monthly Revenue = 3,420.00 x 30
Projected Monthly Revenue = 102,600.00
On the other hand, the projected yearly revenue is computed by multiplying the monthly revenue by 12 months. The
calculation for projected yearly revenue is as follows .
Projected Yearly Revenue = Projected daily revenue x 365 days
Projected Yearly Revenue = 3,420.00 x 365
Projected Yearly Revenue = 1,248,300.00

Table 2
Projected Monthly and Yearly Revenue
Fit Mo'to Ready to Wear Online Selling Business

Type of RTW's Selling Price Projected Volume Projected Projected Projected

Revenue Volume Revenue
 Average No. of (Monthly) Average No. of Yearly
Items Sold Items Sold
(Monthly (Yearly)

(C)= (A+B) F= (D x 30 days) G= (C x F) H= (D x 365 days) I= (C x H)

T-Shirts 135.00 300 40,500.00 3,650 492,750.00

Jeans 345.00 180 62,100.00 2,190 755,550.00

Total 480.00 480 102,600.00 5,840 1,248,300.00

What’s more?

After learning the calculations presented, you can now compute the projected revenue by day, month based on
your business concept.
Aling Minda is operating a buy and sell business, she sells broomsticks (walis tingting) in her stall at a local
market. She gets her broomsticks from a local supplier for 25 pesos each. She then adds 50 percent mark-up on each
broomstick. Every day, aling Minda can sell 30 broomsticks a day.
Use the template below and fill in the necessary figures based on the scenario. Remember to use the factors to consider
in projecting revenues and refer to tables 1, 2.

Table 1
Projected Daily Revenue
Name of Business ___________________________

Merchandise/ Cost per Unit (A) Mark-up ____% Selling Price (C) Projected Volume Projected
Products (B) (D) Revenue (E)

Average No. of (Daily)

Items Sold (Daily

(A) (B)= (A x .50) (C)= (A+B) (D) (E) =(C x D)

Total

Use the calculations you have made in Table 1 to successfully complete the information in Table 2 and calculate the
projected monthly revenue of Aling Minda’s business.

Table 2
Projected Monthly and Yearly Revenue
Name of Business ___________________________

Merchandise/ Selling Price Projected Volume Projected Projected Volume Projected

Products Revenue Revenue

Average No. of Average No. of

Items Sold Monthly Items Sold Yearly
(Monthly (Yearly)

(C)= (A+B) F= (D x 30 days) G= (C x F) H= (D x 365 days) I= (C x H)

Total
Prepared by: Checked & Reviewed by: Validated by:

JOSEPH L. BACALA JESSIELYN L. CUADRILLERO ALBERTO C. ESTAMPA

Subject Teacher Subject Coordinator External Validator

Approved by:

FLUELLEN L. COS, PhD

Principal IV