Cost of Goods Sold Budget After all of the production related budgets are completed, the company can produce the cost of goods sold budget, which is based on the calculation of cost of goods sold, as follows; Beginning Inventory (this is a known quantity and not budgeted) + Expected Budgeted Purchases or Production Expected Goods Available for Sale - Desired Ending Inventory я Budgeted Cost of Goods Sold Other Budgets Other budgets that will need to be prepared in order to complete the budgeting process and to have all of the necessary information to prepare budgeted financial statements are; Research and development (R&D) budget, » Selling and marketing budget, ■ Administrative and general expense budget, Budgets for other expenses or sources of revenue, and p Capital budget. This is the budget for long-term capital expenditures, and any expenditures that are to be made in the budget year will need to be included in the budgeting process. Capital expenditures budgeted for the coming year will affect the budgeted balance sheet as increases in fixed assets and in accounts receivable, inventory andaccounts payable; and they will affect the budgeted Income statement as income expected from the new projects along with related expenses, including depreciation on the new equipment. Those that affect cash will, of course, also flow to the budgeted statement of cash flows. Note; Each of the individual budgets prepared for expenses will also most certainly be broken down into variable and fixed costs. This is significant because of the fact that fixed costs cannot be changed. Also, the variable costs (particularly for overhead and selling and administration) are needed to determine the contribution margin from the business unit. cfa
Posted on: Wed, 04 Sep 2013 04:26:34 +0000
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