Operating budget operating sales budget cash

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Unformatted text preview: Sales budget Cash collections from customers Purchases budget Disbursements for purchases Operating expenses budget Disbursements for operating expenses Cash Collections Cash It is easiest to prepare budgeted cash collections at the same time as the sales budget. Cash collections include the current month’s cash sales plus the previous month’s credit sales. Purchases Budget Purchases Budgeted purchases = Desired ending inventory + Cost of goods sold – Beginning inventory Beginning Disbursements for Purchases Purchases For example, 50% of the current month’s purchases and 50% of the previous month’s purchases may be included. The total disbursements are then used in preparing the cash budget. Operating Expense Budget Operating The budgeting of operating expenses depends on several factors. Month-to-month changes in sales volume and other cost-driver activities directly influence many operating expenses. Operating Expense Budge...
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