Logan Future Factory is producing its cost of sales budget. Direct materials are budgeted to be 50% of sales value. However, due to the expansion of the company in the recent past, suppliers are giving Logan Future Factory a 5% discount on all purchases of direct materials by the firm. Budgeted sales for January 2023 are expected to be $500,000 and to rise by $50,000 a month in the budget year up to December 2023. Direct labour is expected to amount to 15% of sales value and variable overhead is budgeted to be 5% of direct labour cost.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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