Specifically, the following critical elements must be addressed when creating an Operating Budget by completing the budget templates found on the“ Budgets” tab of your student workbook.
Step 1: Prepare a Sales Budget
● Complete Part A- Sales Budget on the budget tab by using the information found in the budgeted balance sheet above.
● Consider assumption 1 while completing this critical element: Sales were 20,000 units in June 2015. Forecasted sales in units are as follows: July, 18,000; August, 22,000; September, 20,000; October, 24,000. The sales price per unit is $ 18.00 and the total product cost is $ 14.35 per unit.
● You can find an example of a sales budget in Exhibit 22-5 on page 1324.
Step 2: Prepare a Production Budget
● Complete Part C- Production Budget on the budget tab below by using the information found in the budgeted balance sheet above.
● Consider assumption 1 while completing this critical element: Sales were 20,000 units in June 2015. Forecasted sales in units are as follows: July, 18,000; August, 22,000; September, 20,000; October, 24,000. The sales price per unit is $ 18.00 and the total product cost is $ 14.35 per unit.
● Consider assumption 2 while completing this critical element: The June 30 finished goods inventory is 16,800 units.
● Consider assumption 3 while completing this critical element: Company policy calls for a given month’ s ending finished goods inventory to equal 70 % of the next month ' s expected unit sales.
● You can find an example of a production budget in Exhibit 22-6 on page 1325.