To Build Exceptional Managerial Skills a
EXECUTIVE SUMMARY
A sales budget is a detailed schedule showing the expected sales for the budget period. Typically, it is expressed in both rupees and units of production. An accurate sales budget is the key to the entire budgeting in some way. If the sales budget is sloppily done then the rest of thebudgeting process is largely a waste of time.
The sales budget will help determine how many units will have to be produced. Thus, the production budget is prepared after the sales budget. The production budget in turn is used to determine the budgets for manufacturing costs including the direct materials budget, the direct labor budget, and the manufacturing overhead budget. These budgets are then combined with data from the sales budget and the selling and administrative expenses budget to determine thecash budget. In essence, the sales budget triggers a chain reaction that leads to the development of the other budgets. The selling and administrative expenses budget is both dependent on and a determinant of the sales budget. This reciprocal relationship arises because sales will in part be determined by the funds committed for advertising and sales promotion.
The sales budget is the starting point in preparing the master budget. All other items in the master budget including production, purchase, inventories, and expenses, depend on it in some way. The sales budget is constructed by multiplying the budgeted sales in units by the selling price.
The primary purpose of having a sales budget is to effectively and accurately determine the number of units that will need to be produced. Units can be used to refer to a physical product, or service. Having an accurate sales budget is a key because if it uses imprecise figures, it will throw off the production budget and budget for manufacturing costs. The production budget follows the sales budget while the budget for manufacturing costs follows the production budget. The budget for manufacturing costs includes
A sales budget is a detailed schedule showing the expected sales for the budget period. Typically, it is expressed in both rupees and units of production. An accurate sales budget is the key to the entire budgeting in some way. If the sales budget is sloppily done then the rest of thebudgeting process is largely a waste of time.
The sales budget will help determine how many units will have to be produced. Thus, the production budget is prepared after the sales budget. The production budget in turn is used to determine the budgets for manufacturing costs including the direct materials budget, the direct labor budget, and the manufacturing overhead budget. These budgets are then combined with data from the sales budget and the selling and administrative expenses budget to determine thecash budget. In essence, the sales budget triggers a chain reaction that leads to the development of the other budgets. The selling and administrative expenses budget is both dependent on and a determinant of the sales budget. This reciprocal relationship arises because sales will in part be determined by the funds committed for advertising and sales promotion.
The sales budget is the starting point in preparing the master budget. All other items in the master budget including production, purchase, inventories, and expenses, depend on it in some way. The sales budget is constructed by multiplying the budgeted sales in units by the selling price.
The primary purpose of having a sales budget is to effectively and accurately determine the number of units that will need to be produced. Units can be used to refer to a physical product, or service. Having an accurate sales budget is a key because if it uses imprecise figures, it will throw off the production budget and budget for manufacturing costs. The production budget follows the sales budget while the budget for manufacturing costs follows the production budget. The budget for manufacturing costs includes