Answer to Question #54486 in Finance for dong phuong thanh nhi

Question

Voyager is a Telco with an innovation that will generate it significant market share growth. This will result in many new customers in several new areas. Telco is aiming for much higher incomes. Consequently it has adopted an organisational expansion policy seeking to maximize income. Voyager is about the revenue forecast but unsure of their total budget expenses.

Explain to Voyager executives the importance of considering related expenses and discuss some of their controls as planning for its aggressive revenue expansion policy.

Answer 1

If Voyager is a Telco with an innovation that will generate it significant market share growth, then this will result in many new customers in several new areas. If Telco is aiming for much higher incomes and consequently it has adopted an organisational expansion policy seeking to maximize income, then Voyager is about the revenue forecast but unsure of their total budget expenses.

Voyager executives should understand the importance of considering related expenses.
The expenses forecast is an estimate of your ongoing operating expenses (overheads, outgoings, fixed costs) for the year. It answers the question of how much it will cost to run your business. The selling price of your products or services must include an amount to recover these expenses.
The executives should use the accounting records for expenses from previous years as a guide and make adjustments to reflect increases in price or changes to your business strategy. For example, you might be planning for growth in the next year so include additional costs for extra employees or more plant and equipment.