Lily Company’s sales budget projects unit sales of part 198Z of 8,400 units in January, 10,000 units in February, and 11,000 units in March. Each unit of part 198Z requires 4 pounds of materials, which cost $2 per pound. Lily Company desires its ending raw materials inventory to equal 40% of the next month’s production requirements, and its ending finished goods inventory to equal 20% of the next month’s expected unit sales. These goals were
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Lily Company’s sales budget projects unit sales of part 198Z of 8,400 units in January, 10,000 units in February, and 11,000 units in March. Each unit of part 198Z requires 4 pounds of materials, which cost $2 per pound. Lily Company desires its ending raw materials inventory to equal 40% of the next month’s production requirements, and its ending finished goods inventory to equal 20% of the next month’s expected unit sales. These goals were met at December 31, 2021.
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