Royal Philips Electronics of the Netherlands reports sales of €24.5 billion for a recent year. Assume that the company expects sales growth of 3% for the next year. Also assume that selling expenses are typically 20% of sales, while general and administrative expenses are 4% of sales. 1. Compute budgeted sales for the next year. 2. Assume budgeted sales for next year are €25 billion, and then compute budgeted selling expenses and budgeted general and administrative expenses for the next year.
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.
Royal Philips Electronics of the Netherlands reports sales of €24.5 billion for a recent year. Assume that
the company expects sales growth of 3% for the next year. Also assume that selling expenses are typically
20% of sales, while general and administrative expenses are 4% of sales.
1. Compute budgeted sales for the next year.
2. Assume budgeted sales for next year are €25 billion, and then compute budgeted selling expenses and
budgeted general and administrative expenses for the next year.
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