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Unformatted text preview: Sales
budget Cash collections
from customers Purchases
for purchases Operating expenses
budget Disbursements for
operating expenses Cash Collections
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
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
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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- Fall '11