Sales budget
Sales budget is an itemization of a company's sales
expectations for the budgeted period, in both units and value. If a company has
a huge product line than it usually aggregates its expected sales into a
smaller number of product categories or geographic regions; otherwise, it
becomes too difficult to generate sales estimates for sales budget.
|
Forecasted
unit sales
|
15,000
|
|
x
Price per unit
|
$100
|
|
Total
gross sales
|
$1,500,000
|
|
-
Sales discounts & allowances
|
$50,000
|
|
-Sales
returns
|
$50,000
|
|
=
Total net sales
|
$1,400,000
|
It is extremely important to prepare the sales budget more
accurately, as most of the sub budget uses the forecasting of the sales.
Therefore, if the sales budget is inaccurate, then same will be with other
budgets that use sales budget as source material.
Production budget
Production
budget something which is being prepared to calculate the number of unit that
should be manufactured. It is combination of sales forecast and closing inventory
of finished goods. We take closing inventory to cope with the unexpected demand
increase. Production budget is typically presented monthly, quarterly format.
Product to
be manufactured= Forecasted sales + Closing Inventory – Opening Inventory
|
Forecasted
unit sales
|
15,000
|
|
Closing
Inventory
|
5,000
|
|
Total
unit required
|
20,000
|
|
-
Opening Inventory
|
2,000
|
|
=Product
to be manufactured
|
18,000
|
