Operating Budgets - Preparing the Operating Budgets We use...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Preparing the Operating Budgets We use a case study of Hayes Company in preparing the operating budgets. Hayes manufactures and sells a single product, Kitchen-Mate. The budgets are prepared by quarters for the year ending December 31, 2010. Hayes Company begins its annual budgeting process on September 1, 2009, and it completes the budget for 2010 by December 1, 2009. Sales Budget Helpful Hint For a retail or manufacturing company, what is the starting point in preparing the master budget, and why? Answer: The sales budget is the starting point for the master budget. It sets the level of activity for other functions such as production and purchasing. As shown in the master budget in Illustration 20-2 , the sales budget is the first budget prepared . Each of the other budgets depends on the sales budget. The sales budget is derived from the sales forecast . It represents management's best estimate of sales revenue for the budget period. An inaccurate sales budget may adversely affect net income. For example, an overly
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.

Page1 / 2

Operating Budgets - Preparing the Operating Budgets We use...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online