Which of the following is true of the sales budget? A. It is used in the production budget. B. It captures the variable and fixed expenses of the business. C. It shows the cost of expected production in a period. D. It provides sales data that is used to prepare financial statements for external reporting purposes

Question

Armando Jones

Business

18 February, 11:24

Which of the following is true of the sales budget? A. It is used in the production budget. B. It captures the variable and fixed expenses of the business. C. It shows the cost of expected production in a period. D. It provides sales data that is used to prepare financial statements for external reporting purposes

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Answers (2)

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Matilda Vaughn · Answer 1

It is used in the production budget

Explanation:

Sales budget can be defined as an outline of the quantity of goods and services that the management of an organisation hopes to sell in specific markets during a particular period of time, and the amount of income the organisation expects to earn from them.

Budgeting is a necessity for any type of business. Without a proper budget most organisation will not be able to keep track of process or improve their performance.

The sales budget of an organisation also serves as a form of guide for the sales department, who have to ensure that they meet or exceed the sales budget.

Nyla Mason · Answer 2

A. It is used in the production budget.

Explanation:

A sales budget provides an estimate of the volume of goods and services that a company proposes to sell in a future period. It is usually made for the following year. Most sales budgets include monthly and quarterly figures as well. Additionally, the budget provides details in both dollars and units.

The production budget calculates the number of units of products that must be manufactured and is derived from a combination of the sales forecast and the planned amount of finished goods inventory to have on hand (usually as safety stock to cover for unexpected increases in demand).

The basic calculation in the sales budget is to itemize the number of unit sales expected in one row, and then list the average expected unit price in the next row, with the total sales appearing in a third row. The unit price may be adjusted for marketing promotions.

The sales budget and the production budget involve simple calculations. For example, the company expects to sell 10,000 units of products over the next year. The sales budget then multiplies the number of units by the price of one unit.