FINC 577 Chapter 9 Notes Outline

Every other budget depends on the sales budget

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Unformatted text preview: ry other budget depends on the sales budget. Prepared by multiplying expected unit sales volume for each product by anticipated unit selling price. Chapter 9-16 Operating Operating Budgets: Sales Budget Example Example – Hayes Company Expected sales volume: 3,000 units in the first quarter with 500-unit increments for each 500following quarter. Sales price: $60 per unit. Illustration 9-3 Chapter 9-17 Operating Budgets: Production Budget Shows the units that must be produced to meet units anticipated sales. Derived from sales budget plus the desired change th in in ending finished goods (ending finished goods less the beginning finished goods units). Required production in units formula: Chapter 9-18 Operating Operating Budgets: Production Budget Example – Hayes Company Hayes Co. believes it can meet future sales needs with an ending inventory of 20% of next quarter’s sales. Chapter 9-19 Illustration 9-5 Operating Budgets: Direct Materials Budget Shows both the quantity and cost of direct quantity materials to be purchased. di Derived from the direct materials units required for for production (from the production budget) plus the desired change in ending direct materials units. Budgeted cost of direct materials to be purchased = required units of direct materials × anticipated cost per unit. Chapter 9-20 Operating Operating Budgets: Direct Materials Budget Example – Hayes Company Key component in budgeting process – desired ending inventor...
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