Nine-Month Total Quarter Ended March 31 June 30 September 30 S 28,000 112,000 $ 140,000 $ 33,000 132,000 $ 165,000 $ 99,000 396,000 $ 495,000 Cash sales, 20% Credit sales, 80% $ 38,000 152,000 Total sales $ 190,000
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.
Preparing an operating budget—inventory, purchases, and cost of goods sold budget
Slate, Inc. sells tire rims. Its sales budget for the nine months ended September 30, 2018, follows:
In the past, cost of goods sold has been 40% of total sales. The director of marketing and the financial vice president agree that each quarter’s ending inventory should not be below $5,000 plus 10% of cost of goods sold for the following quarter. The marketing director expects sales of $240,000 during the fourth quarter. The January 1 inventory was $38,000. Prepare an inventory, purchases, and cost of goods sold budget for each of the first three quarters of the year. Compute cost of goods sold for the entire nine-month period.
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