ACC220_WK7_Appendix_C - production requirements...

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Axia College Material Appendix C Budgets Matrix Directions : Using the matrix, define each of the budgets listed and briefly describe its uses. Budget Definition Describe its uses Sales budget The sales budget is derived from the sales forecast which represents management’s best estimate of sales revenue for the budget period. The sales budget sets the level of activity for other functions such as production and purchasing. Production budget The production budget shows the units that must be produced to meet anticipated sales. The production budget shows the company production requirements. Direct materials budget The direct materials budget shows both the quantity and cost of direct materials to be purchased. The direct material budget shows the cost of material to meet production requirements. Direct labor budget The direct labor budget contains the amount of hours and cost of direct labor necessary to meet production requirements. The direct labor budget shows the number of hours and cost of direct labor necessary to meet
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Unformatted text preview: production requirements. Manufacturing overhead budget The manufacturing overhead budget shows the expected manufacturing overhead costs for budget period. The manufacturing overhead budget shows cost of overhead and distinguishes between variable and fixed overhead costs. Selling and administrative expense budget The selling and administrative expense budget projects anticipated selling and administrative expenses for the budget period. The selling and administrative expense budget shows costs related to sales and administration. Budgeted income statement The budgeted income statement indicates the expected profitability of operations for the budget period. The budgeted income statement provides the basis for evaluating a company’s financial performance. Cash budget The cash budget shows anticipated cash flow. A cash budget contributes to more effective cash management. It can show managers when additional financing will be necessary. ACC 220...
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