Example of Revenue from Sales - Assumption 1
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NOTE 1 - TOTAL REVENUE FROM SALES
The following chart depicts the figures used in calculating the Company's Total Revenue from Sales:
| Year 1 | Year 2 | Year 3 | |
| Weighted Average Selling Price (per unit) * | $73.89 | $68.01 | $67.61 |
| Forecasted Unit Sales per Year | 7,882 | 9,907 | 11,602 |
| TOTAL FORECASTED REVENUE | $582,401 | $673,775 | $784,411 |
* Weighed Average Selling Price per unit:
Since the Company is selling one product in four product forms, each having a different selling price, J&B has decided to use the weighted average method. In short, the weighted average method considers the three different selling prices and reduces them down into one single price (note: the product in hard copy form is not considered in the forecasted financial statements). The weighted average selling price per unit is calculated as follows;
| YEAR 1 |
Diskette
Form
|
CD
Form
|
Internet
Form
|
| Selling Price per unit | $67.49 | $67.49 | $67.49 |
| Shipping & Handling | $ 6.73 | $ 6.73 | $ 0.00 |
| Total Selling Price/unit | $74.22 | $74.22 | $67.49 |
| Estimated Selling Rate per form | 60% | 35% | 5% |
| Adjusted Factors: (selling price x selling rate) | 44.53 | 25.98 | 3.37 |
| Weighed Average Selling Price (Sum of all Adjusted Factors) | $73.89 | ||
| YEAR 2 | Diskette Form | CD Form | Internet Form |
| Selling Price per unit | $60.74 | $60.74 | $60.74 |
| Shipping & Handling | $ 8.08 | $ 8.08 | $ 0.00 |
| Total Selling Price/unit | $68.82 | $68.82 | $60.74 |
| Estimated Selling Rate per form | 40% | 50% | 10% |
| Adjusted Factors: (selling price x selling rate) | 27.53 | 34.41 | 6.07 |
| Weighed Average Selling Price (Sum of all Adjusted Factors) | $68.01 | ||
In short, the WASP is calculated by multiplying each product's selling price by each product's estimated selling rate. The result is become known as the adjusted factor. Each adjusted factor is then added together to arrive at the weighted average selling price. The WASP for year three is calculated in the same manner. The most important element in calculating the weighted average selling price is the estimated selling rate of each product form. Moreover, this rate estimates the percentage J&B feels customers will buy each product form. For instance, J&B feels that 60% of the total yearly customers (in year one) will purchase the product in Diskette form, 35% will buy the product in CD and 5% of customers in year one will buy the product in Internet form (60% + 35% + 5% = 100% or total customers).