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 .