Scribd
Upload
1K views14 pages

What Is Sales and Production Budget

The master budget encompasses all other budgets such as the sales, production, purchases, expenses and capital investment budgets and shows expected future sales, production levels and finances. The sales budget is derived from sales forecasts and shows expected sales units and dollars, while the production budget shows the units that must be produced to meet anticipated sales as derived from the sales budget and planned finished goods inventory.

Uploaded by

Ankur Tripathy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
1K views14 pages

What Is Sales and Production Budget

The master budget encompasses all other budgets such as the sales, production, purchases, expenses and capital investment budgets and shows expected future sales, production levels and finances. The sales budget is derived from sales forecasts and shows expected sales units and dollars, while the production budget shows the units that must be produced to meet anticipated sales as derived from the sales budget and planned finished goods inventory.

Uploaded by

Ankur Tripathy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 14

Section 11

Objective 8

Sales and
Production Budget
Prepare Sales and Production Budgets
Sales and
Production
Budgets
Sales and Production Budgets
The master budget:
• The master budget is a business’s one-year budget planning
document.
• It encompasses all other budgets.
• The document include budgets which shows
– expected future sales
– productions levels
– purchases, future expenses incurred
– capital investments
– loans to be acquired and repaid.
• Examples of budgets are cash, sales, purchases and many others.
Sales and
Production
Budgets
Sales and
Production
Budgets
• Sales budget:
• A sales budget is a detailed schedule showing the expected
sales for the coming periods.
• It is expressed in both dollars and units of product.
• The budget is the key to the entire budgeting process.
• The sales budget is the first budget of the master budget
that is prepared for a firm.
Sales and
Production
Budgets
Sales budget:
• The sales budget is derived from the sales forecast.
Sales forecast:
• Sales forecast is the projection of potential sales for
the industry and a company’s expected share of
sales.
• The formula to calculate sales for each period is:
Total Sales = Expected unit sales x Unit selling price
Sales budget template:
Sales and
Production
Budgets
• Production budget:
– Terms:
– Production inputs are the components used
to produce goods or services.
• They are direct materials, direct labour and
the manufacturing overhead.
– Production costs (also known as
manufacturing cost or inventoriable costs)
• refers to the costs incurred in the manufacturing
of goods or services.
Sales and
Production
Budgets

• Production budget:
– The production budget shows the units that must be
produced to meet anticipated sales
– This budget is prepared after the preparation of
the sales budget.
– The amount for the budget is derived from the the
sales budget and also the planned amount of finished
goods inventory to have on hand
Sales and
Production
Budgets
• Production budget:
– In the budgeting process, after the production budget is
set, it becomes the key factor in determining the other
budgets.
– The formula to calculate the required production
units for each period is:
– Production units = Budgeted sales units + desired
ending finished goods units – beginning finished goods
units
Sales and
Production
Budgets
• Production budget template:
Sales and
Production
Budgets

• Look at the links on the next two slides and watch


the following videos on the sales and production
budgets
Sales and
Production
Budgets

• Go to:
‘The Sales Budget’
Education Unlocked
https://www.youtube.com/watch?v=frCX_bsFsao

‘The Production Budget’


Education Unlocked
https://www.youtube.com/watch?
v=YwIUeaFkOS8

You might also like