BUS 215 Lecture Notes - Lecture 6: Income Statement, Finished Good, Deutsche Luft Hansa
Document Summary
Choosing the budget period: operating budgets ordinarily cover a one-year period corresponding to a company"s fiscal year. Many companies divide their annual budget into four quarters: a continuous budget is a 12 month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed. The sales budget: the individual months of a quarter are summed to obtain the total budget sales in units and dollars for the quarter, expected cash collections. The production budget: beginning inventory is always the ending inventory of the previous period, budgeted sales + desired ending inventory - beginning inventory = inventory to manufacture. The direct materials budget: production*materials per unit = production needs, production needs + desired ending inventory = total needed, total needed - beginning inventory = materials to be purchased, expected cash disbursement for materials, think of accounts payable.
