Managerial Accounting: Tools For Business Decision-Making

Managerial Accounting
Tools for Business Decision-Making

Sixth Canadian Edition
Weygandt Kimmel Aly
Chapter 10
Budgetary Planning
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Copyright ©2021 John Wiley & Sons Canada, Ltd.

Learning Objectives
1. State the essentials of effective budgeting and the
components of a master budget.
2. Prepare budgets for sales, production, and direct materials.
3. Prepare budgets for direct labour, manufacturing
overhead, and selling and administrative expenses, and a
budgeted income statement.
4. Prepare the cash budget and the budgeted balance sheet.
5. Explain the applicability of budgeting in non-manufacturing
companies.
Copyright ©2021 John Wiley & Sons Canada, Ltd. 2

Budgeting Basics and the Master Budget
(1 of 5)
A budget
• is a formal written statement of management’s plans for a
specified future time period, expressed in financial terms.
• is a primary way to communicate agreed-upon objectives
to all parts of the company.
• Is a tool management may use to promote efficiency and
discourage waste.
• is an important basis for performance evaluation once
adopted.

(2 of 5)
• Historical accounting data on revenues, costs, and
expenses help in formulating future budgets
• Accountants are responsible for presenting
management’s budgeting goals in financial terms
o Also prepare periodic budget reports used in performance
measurement and to compare plans with actual results
• The budget and its administration are management’s
responsibility

(3 of 5)
Budgeting benefits include:
• Requires all management levels to plan ahead and formalize
goals on a recurring basis
• Provides definite objectives for evaluating performance at
each level of responsibility
• Creates an early warning system for potential problems
• Facilitates coordination of activities within the business
• Results in greater management awareness of the entity’s
overall operations and the impact of external factors
• Motivates personnel throughout organization to meet planned
objectives
(4 of 5)
• A sound organizational structure, with clearly
defined lines of authority and responsibility needed
for effective budgeting
• Using sound research and analysis when creating the
budget should result in a budget with realistic goals
• A budget must be accepted by all levels of
management to be fully effective
A budget is an aid to management not a substitute for

management.
(5 of 5)
• May be prepared for any period of time
o Most common - one year
o Supplement with monthly and quarterly budgets
o Different budgets may cover different time periods
• Long enough to provide an attainable goal and minimize
seasonal or cyclical fluctuations
• Short enough for reliable estimates
• Continuous twelve-month budget
o Drop the month just ended and add a future month
o Keeps management planning a full year ahead
The Budgeting Process (1 of 3)
• Begins with a sales forecast that includes
o Potential sales for the industry in the area
o Firm’s expected share of the industry sales
• Factors to be considered in the Sales Forecast:
o General economic conditions
o Industry trends
o Market research studies
o Anticipated advertising and promotion
o Previous market share
o Price changes
o Technological developments

• Overall process is usually informal in small companies
• Assigned to a budget committee in larger firms
o Include the president, treasurer, chief accountant
(controller), and management personnel from each
major area of the company
o Committee acts as a review board where managers
defend budget goals and requests

• Can inspire higher levels of performance or discourage
additional effort
• Depends on how the budget is developed and
administered
• Each level of management should be invited to
participate in the budget process
o This “bottom-up” approach is called Participative
Budgeting

The Budgeting Process: Participative
Budgeting (1 of 2)
• Overall goal – to produce a budget considered fair and
achievable by managers while still meeting corporate
goals
• Risk of unreliable budgets greater when they are “top-
down”
o No real buy-in from lower level managers

The Budgeting Process: Participative
Budgeting (2 of 2)
Advantages:
• More accurate budget estimates
o Lower level managers have more detailed knowledge of their
area
• Tendency to perceive the overall process as fair due to
involvement of lower level management
Disadvantages:
• Can be time consuming and costly
• Can foster budgetary “gaming” through budgetary slack
o When managers intentionally underestimate revenues or
overestimate expenses so that budget goals are easier to meet
Budgeting and Long-Range Planning
Differences Budgeting Long range Planning
Time period involved Short-term – usually Usually at least five
one year years
Emphasis Achievement of Identifies long term
specific short-term goals, selects strategies
goals to achieve goals, and
develops policies and
plans to implement
strategies
Detail presented Very detailed Contain less detail
review of progress
toward long term goals

The Master Budget (1 of 2)
• A set of interrelated budgets that constitute a plan of action for
a specified time period
• Contains two categories of budgets:
o Operating budgets
• Individual budgets that result in the preparation of the budgeted
income statement
o Financial budgets
• Budgets that focus primarily on cash needs to fund operations and
capital expenditures
• Uses information from the operating budgets
• Final budget prepared is the balance sheet

The Master Budget (2 of 2)
Master budget components

Let’s Review 1
Which of the following is NOT a reason why firms use
budgets?
a. Performance evaluation
b. Coordination
c. Planning
d. Operating leverage

Let’s Review 1: Solution
Which of the following is NOT a reason why firms use
budgets?
a. Performance evaluation
b. Coordination
c. Planning
d. Operating leverage (correct answer)

Preparing the Sales, Production, and
Direct Materials Budgets (1 of 2)
Sequence of budget preparation
1. Sales budget
o Number of units sold drives the production budget
2. Production budget
o Number of units produced is not the same as the number of units
sold
o Beginning and ending inventories must be considered
o Production budget leads to the:
1. Direct Materials budget
2. Direct Labour budget
3. Manufacturing Overhead budget

Preparing the Sales, Production, and
Direct Materials Budgets (2 of 2)
• Sales budget
o Management’s best estimate of sales revenue for the
budget period
o Prepared by multiplying expected unit sales volume for
each product and anticipated unit selling price
• Budgeted sales revenue dollars used in the Budgeted
Income Statement and Cash Budget
• Budgeted unit sales used in the Production budget –
which drives all other operating budgets

Operating Budgets: Hayes Company –
Example
• Expected sales volume: 3,000 units in the first quarter
with 500-unit increments for each following quarter
• Sales price: $60 per unit, expected to remain constant
for the year
• Finished goods inventory at the beginning of the
budget period was 600 units
• Target ending finished goods inventory is 20% of the
next quarter’s unit sales

Sales Budget
• The number of units sold each quarter will be used to

create the production budget
• The total sales dollars for each quarter will be used in
the Budgeted Income Statement and the Cash Flow
Budget
Operating Budgets: Production Budget
• Shows the units that must be produced in order to
meet budgeted sales and inventory targets
• Production budget drives the materials, direct labour
and manufacturing overhead budgets
• Production budget does not include dollar values –
only units
• Production budget calculation:
Desired Ending Beginning
Expected Sales + − Required
Finished Goods Finished Goods =
Units Production Units
Units Units

Production Budget
• Ending inventory calculations are, respectively: 3,500 x 20% = 700; 4,000 x

20% = 800 and 4,500 x 20% = 900 units
• Ending inventory for a quarter is the beginning inventory for the following
quarter as noted by the →
Let’s Review 2
Roletter Ltd. makes and sells picture frames. The sales team has provided
the following estimated sales information for the upcoming period.
January February March April May
Unit sales 10,000 12,000 8,000 9,000 9,500
Selling price per unit $50.00 $50.00 $52.00 $52.00 $52.00
Finished Goods Inventory
January 1st = 8,000 frames
Target ending finished goods inventory =
75% of the following months sales
How many units should Roletter Ltd. produce in April?

a. 7,125 units
b. 8,625 units
c. 9,000 units
d. 9,375 units
Roletter Ltd. makes and sells picture frames. The sales team has provided
the following estimated sales information for the upcoming period.
Unit sales 10,000 12,000 8,000 9,000 9,500
Selling price per unit $50.00 $50.00 $52.00 $52.00 $52.00
Finished Goods Inventory
January 1st = 8,000 frames
Target ending finished goods inventory =
75% of the following months sales
How many units should Roletter Ltd. produce in April?

a. 7,125 units
b. 8,625 units
c. 9,000 units
d. 9,375 units (correct answer)
Operating Budgets: Direct Materials
Budget (1 of 2)
• Direct materials (DM) budget reports three key pieces
of information
o Units of DM needed to meet production and inventory
needs
• Target ending inventory for DM key component to the
DM budget
o Direct materials to be purchased
o Cost of the direct materials to be purchased which is
also part of the Cash Flow Budget

Operating Budgets: Direct Materials
Budget (2 of 2)
• Calculation for direct materials needed for production:
Direct Materials Direct Materials Units
Units to Be Produced × =
per Unit Produced Required for Production
• Calculation for direct materials to be purchased:

Direct Materials Desired Ending Direct Materials
+ − Beginning Direct
Units Required Direct = Units to Be
Materials Units
for Production Materials Units Purchased
• Calculation for direct materials cost:

Direct Materials
Cost per Direct Cost of Direct Materials
Units to Be × =
Materials Unit Purchases
Purchased

Direct Materials Budget (1 of 2)
• An ending inventory of 10% of next quarter’s production
requirements is sufficient
• Each finished product unit requires 2 Kg of raw materials at an
expected price of $4 per Kg.
• Recall from the Production Budget the following number of units
to be produced each quarter

Direct Materials Budget (2 of 2)
• Ending inventory calculations are, respectively: 7,200 x 10% = 720; 8,200 x

10% = 820 and 9,200 x 10% = 920 units
• Ending inventory for a quarter is the beginning inventory for the following
quarter as noted by the →
Let’s Review 3
Roletter Ltd. makes and sells picture frames. A sales and production budget for
the coming period follows:
Sales 10,000 12,000 8,000 9,000 9,500
Production 11,000 9,000 8,750 9,375 9,875
Each frame requires 3.0 meters of wood to produce. Roletter began the period
with 2,800 meters and their target ending inventory for wood is 20% of the next
months production needs. How many meters of wood should Roletter purchase
in the month of March?
a. 25,875
b. 26,250
c. 26,625
d. 29,075
Sales 10,000 12,000 8,000 9,000 9,500
Production 11,000 9,000 8,750 9,375 9,875
Each frame requires 3.0 meters of wood to produce. Roletter began the period
with 2,800 meters and their target ending inventory for wood is 20% of the next
months production needs. How many meters of wood should Roletter purchase
in the month of March?
a. 25,875
b. 26,250
c. 26,625 (correct answer)
d. 29,075
Preparing the Direct Labour, Manufacturing Overhead, and
S&A Expense Budgets
• Direct labour and manufacturing overhead budgets

are based on the production budget
o No inventories to account for
• Manufacturing overhead: distinguishes between
fixed and variable overhead costs
o Applies whether traditional or activity-based costing
methods are applied
• Sales and administrative (S&A) expense budget not
directly based on production budget

Operating Budgets: Direct Labour
• Shows both the quantity of hours and cost of direct labour

necessary to meet production requirements
• Key to maintaining a labour force that can meet expected
production
• Total direct labour cost calculation:
Units to Be × Direct Labour × Direct Labour Total Direct

=
Produced Hours per Unit Cost per Hour Labour Cost

Direct Labour Budget
• Two hours of direct labour needed per unit
• Hourly wage rate $10

Manufacturing Overhead Budget (1 of 3)
• Total fixed cost amounts are assumed in the example
• Predetermined variable overhead rate per direct
labour hour:
o Indirect materials: $1.00
o Indirect labour: $1.40
o Utilities: $0.40
o Maintenance: $0.20

• The predetermined overhead rate for variable
manufacturing costs could also be presented as:
$1.00+$1.40+$0.40+$0.20 = $3.00 per direct labour
hour
• By separating the amounts more information can be
provided on the manufacturing overhead budget
• By using a single rate, the manufacturing overhead
budget is ‘cleaner’ however detail is lost


Operating Budgets: S&A Expense Budget
• Projection of anticipated operating expenses

• Distinguishes between fixed and variable costs
o Variable costs typically based on the number of units
sold
o Fixed costs typically based on a review of previous
years expenses and anticipated cost increases or
decreases

S&A Expense Budget
• Fixed cost amounts are assumed
• Expected variable costs per unit sold (from sales
budget):
o Sales commissions: $3.00
o Freight-out: $1.00

S&A Budget

Let’s Review 4
Production 10,000 12,000 8,000 9,000 9,500
Direct labour hours per unit 2.0 2.0 1.5 1.5 1.5
Direct labour cost per hour is $9.00 for January through March and $10.00 per
hour thereafter. What is the expected direct labour cost for the month of May?
a. $128,250
b. $142,500
c. $171,000
d. $190,000

Production 10,000 12,000 8,000 9,000 9,500
Direct labour hours per unit 2.0 2.0 1.5 1.5 1.5
Direct labour cost per hour is $9.00 for January through March and $10.00 per
hour thereafter. What is the expected direct labour cost for the month of May?
a. $128,250
b. $142,500 (correct answer)
c. $171,000
d. $190,000

Operating Budgets: Budgeted Income Statement
• Important end-product of the operating budgets

• Indicates expected profitability of operations
• Provides a basis for evaluating company performance
• Prepared from operating budget information
• Sales budget → Total sales revenue
• Production, Direct materials, Direct labour and
Manufacturing overhead budgets → Cost per unit
o To determine Cost of Goods Sold and Gross Profit

Operating Budgets: Hayes Company
Budgeted Income Statement (1 of 4)
• From the Sales Budget:
• Next step is to determine the Cost of Goods Sold

• The cost to produce each unit of Rightride
Cost of One Rightride
Cost component Illustration Quantity Unit Cost Total
Direct materials 10-9 2 kg $ 8.00
Direct labour 10-11 $ 4.00 20.00
Manufacturing overhead 10-12 2 hours 16.00
Total unit cost 10.00 $44.00
2 hours
8.00
• Determine Cost of goods sold by multiplying units
sold times unit cost:
15,000 units × $44 = $660,000

• Period expenses:
o Selling and Administrative Expense budget:
• Variable expenses = $60,000
• Fixed expenses = $120,000
o Expenses typically not included on the S&A budget include
interest expense; income taxes; miscellaneous or other
revenue
o For Hayes Company:
• Interest expense - $100
• Income taxes - $12,000

Hayes Company
Budgeted Income Statement Year Ending December 31, 2022
Sales (Illustration 10.3) $900,000
Cost of goods sold (15,000 × $44) 660,000
Gross profit 240,000
Selling and administrative expenses (Illustration 10.13) 180,000
Income from operations 60,000
Interest expense 100
Income before income taxes 59,900
Income tax expense 12,000
Net income $ 47,900
• Cost of Goods Sold calculation can be reported on the Budgeted on the

Income Statement, or referenced to the Sales and Production budgets
• Selling and administrative expense details can be reported on the Budgeted
Income Statement or referenced to the S&A budget
Let’s Review 5
The production budget is used to derive the budgets for
which of the following?
a. Materials budget
b. Labour budget
c. Overhead budget
d. All of the above

The production budget is used to derive the budgets for
which of the following?
a. Materials budget
b. Labour budget
c. Overhead budget
d. All of the above (correct answer)

Let’s Review 6
Fit-to-Go Ltd. expects to sell 30,000 of its step exercisers for $180
each in 2022. Per unit costs are: Direct materials - $20, Direct
labour - $8, Manufacturing overhead - $6 and Selling costs - $4. Fit-
to-Go began the year with 6,000 units in its Finished Goods
Inventory and expects to end the year with 5,000 units in inventory.
What is the total budgeted for cost of goods sold for 2022?
a. $986,000
b. $1,020,000
c. $1,140,000
d. $1,156,000

Fit-to-Go Ltd. expects to sell 30,000 of its step exercisers for $180
each in 2022. Per unit costs are: Direct materials - $20, Direct
labour - $8, Manufacturing overhead - $6 and Selling costs - $4. Fit-
to-Go began the year with 6,000 units in its Finished Goods
Inventory and expects to end the year with 5,000 units in inventory.
What is the total budgeted for cost of goods sold for 2022?
a. $986,000
b. $1,020,000 (correct answer)
c. $1,140,000
d. $1,156,000

Financial Budgets
• Includes the:
o Capital Expenditure Budget
• Covered in Chapter 13
o Cash Budget
• Considered the most important budget as no business is
sustainable without cash
• Often the most overlooked budget
o Budgeted Balance Sheet

Financial Budgets: Cash Budget (1 of 5)
• Reports anticipated cash flows
• Prepared at least monthly to assist in overall cash
management
o Helps to plan short-term financing needs or repayments
• Contains three sections:
1. Cash receipts
2. Cash disbursements
3. Financing
• Includes beginning and ending cash balances

Cash receipts section
• Includes expected receipts from the principal sources of
revenue – usually cash sales and collections on credit sales
• Includes any other expected cash inflows such as:
o interest and dividend receipts
o proceeds from planned sales of investments, plant assets,
and share capital

Cash disbursements section
• Includes expected cash payments for:
o Direct material purchase (typically accounts payable
payments)
o Direct and indirect labour costs, fixed and variable overhead
costs
o All other period expenses
o All other non expense disbursements including income tax
instalments, dividends, plant assets acquisitions, investment
purchases

Financing section
• Shows expected borrowings and repayments of borrowed
funds plus interest
o Funds will need to be borrowed when there is a cash
deficiency or when the cash balance is below
management’s minimum required balance
o Borrowed funds can be repaid when there is a cash surplus,
or the cash balance is greater than the minimum required
cash balance

• Information is taken from other budgets and from
management
o Any minimum required cash balance
o Expected cash inflows/outflows that are outside of the
operating budgets
• Basic Cash Budget format
• Ending cash balance = Beginning cash balance for next period

Financial Budgets: Hayes Company
Cash Budget (1 of 4)
Information provided:
• Cash budget is prepared quarterly
o Cash balance, January 1, 2022: $38,000
o Minimum required cash balance is $15,000
• Accounts receivable collections:
o 60% collected in the quarter in which unit was sold
o 40% collected in the next quarter
o Accounts Receivable beginning balance of $60,000 is collected in
the first quarter of 2022
• $2,000 proceeds from sale of investment expected in first
quarter of 2022
• Direct Materials: pay 50% in the quarter purchased; 50% in the
following quarter
o Accounts Payable opening balance of $10,600 is paid in the first quarter
of 2022
o Based on the assumption that all direct material purchases go through
accounts payable
• Direct Labour: Pay in the quarter incurred
• Manufacturing Overhead and Selling/Admin Expenses: Pay in the
quarter incurred
• Expected truck purchase: $10,000 in Quarter 2
• Income taxes: Equal payment each quarter
• Loans: Pay in earliest quarter with sufficient cash
Financial Budgets: Hayes Company –
Cash Collections Schedule
Quarter 1 collections = $60,000 + ($180,000Qtr 1 Sales x 60%)

Quarter 2 collections = ($210,000Qtr 2 Sales x 60%) + ($180,000Qtr 1 Sales x 40%)
Financial Budgets: Hayes Company – DM
Cash Payments
Quarter 1 payments = $10,600 + ($25,200Qtr 1 Purch x 50%)

Quarter 2 payments = ($29,200Qtr 2 Purch x 50%) + ($25,200Qtr 1 Purch x 50%)
• Full cash budget may now be prepared
• Cash receipts information from:
o Cash collections schedule
o Other information provided by management
• Cash disbursements information from:
o Cash payments schedule
o Direct labour, Manufacturing overhead and S&A budgets
o Other information provided by management
• Opening cash balance as provided; minimum cash balance
as provided by management

Let’s Review 7
Which one of the following items would NEVER appear
on a cash budget?
a. Delivery expense
b. Depreciation expense
c. Cost of material purchases
d. Cash received from customers

Which one of the following items would NEVER appear
on a cash budget?
a. Delivery expense
b. Depreciation expense (correct answer)
c. Cost of material purchases
d. Cash received from customers

Let’s Review 8
The Dilly Company (DC) began operations on December 1, 2021.
All sales are credit sales with 50% collected in the month of sale,
40% in the month following and 10% in the second month
following the sale. DC has estimated sales at $1,900,000 for
December, $1,500,000 for January, $1,700,000 for February and
$1,600,000 for March. The estimated cash collections from
customers in the month of February will be?
a. $1,450,000
b. $1,510,000
c. $1,630,000
d. $1,640,000

The Dilly Company (DC) began operations on December 1, 2021.
All sales are credit sales with 50% collected in the month of sale,
40% in the month following and 10% in the second month
following the sale. DC has estimated sales at $1,900,000 for
December, $1,500,000 for January, $1,700,000 for February and
$1,600,000 for March. The estimated cash collections from
customers in the month of February will be?
a. $1,450,000
b. $1,510,000
c. $1,630,000
d. $1,640,000 (correct answer)

Financial Budgets
Budgeted Balance Sheet
• A projection of financial position at the end of the budget
period
• Developed from the budgeted balance sheet for the
preceding year and the budgets for the current year
o Net income from the Budgeted Income Statement is added
to the beginning balances for Retained Earnings
o Finished Goods Inventory is taken from the Production
Budget
o Building and equipment accounts are updated using
information from the Capital Expenditure Budget

Budgeted Balance Sheet
Hayes Company
(1 of 3)
Budgeted Balance Sheet December 31,2022
Assets
Cash $
37,900
Accounts receivable
108,000
Finished goods inventory
44,000
Raw materials inventory
4,080
Total current assets
193,980
Buildings and equipment $192,000
Less: Accumulated depreciation 48,000
144,000
Total assets
$337,980
Liabilities and Shareholders’ Equity
Accounts payable $
18,600
Common shares $225,000
Retained earnings
Copyright ©2021 John Wiley & Sons Canada, Ltd. 94,380 69
Budgeted Balance Sheet (2 of 3)
Calculations and sources for amounts shown are as follows:
• Cash: Ending cash balance of $37,900 from cash budget
• Accounts Receivable: 40% of 4th -quarter sales of $270,000,
from the schedule of cash collections
• Finished goods inventory: Target ending inventory of 1,000
units, from the production budget at $44 per unit
• Raw materials inventory: Target ending inventory of 1,020
kg, from the direct materials budget at $4 per kg
• Buildings and equipment: Beginning balance of $182,000,
plus $10,000 truck purchase

Budgeted Balance Sheet (3 of 3)
• Accumulated depreciation: Beginning balance of $28,800
plus $15,200 depreciation expense from the manufacturing
overhead budget and $4,000 from the selling and
administrative expenses budget
• Accounts payable: 50% of 4th-quarter purchases of $37,200,
from the schedule of payments for direct materials
• Common shares: Unchanged from the beginning of the year.
• Retained earnings: Opening balance of $46,480, plus net
income of $47,900 from the budgeted income statement

Budgeting in Non-Manufacturing
Companies
• Budgeting tools and techniques applicable to
merchandise enterprises; service companies and
not-for-profit organizations
• Sales budget will apply to all
o Not-for-profit will create a revenue budget for
donations

Budgeting for Merchandisers
• Sales Budget: starting point and key factor in developing
master budget
• Use a purchases budget instead of a production budget
• Does not use the manufacturing budgets (direct materials,
direct labour, and manufacturing overhead)
• To determine budgeted merchandise purchases:
Desired Ending Beginning Required

Budgeted Cost + −
Merchandise Merchandise = Merchandise
of Goods Sold
Inventory Inventory Purchases

Budgeting: Merchandisers
Lima Company – Example
Budgeted sales for July $300,000 and August $320,000
Cost of goods sold: 70% of sales
Desired ending inventory: 30% of next month’s cost of goods sold
Lima Company
Merchandise Purchases Budget
Month Ending July 31, 2022
Budgeted cost of goods sold ($300,000 × 70%)
$210,000
Plus: Desired ending merchandise inventory ($224,000 × 30%) 67,200
Total
277,200
Less: Beginning merchandise inventory ($210,000 × 30%) 63,000
Budgeted merchandise purchases for July
Copyright ©2021 John Wiley & Sons Canada, Ltd. $214,200 74
Budgeting: Service Enterprises
• Critical factor in budgeting is coordinating professional
staff needs with expected services
• Problems if overstaffed:
o Disproportionately high labour costs
o Lower profits due to additional salaries
o Increased staff turnover due to no challenging work
• Problems if understaffed:
o Lost revenue because existing and prospective client needs
for service cannot be met
o Loss of professional staff due to excessive work loads

Budgeting: Not-for-Profit Organizations
• Important process that differs significantly from that of
a profit-oriented company
• Budget on the basis of cash flows (expenditures and
receipts), rather than on a revenue and expense basis
• The starting point is expenditures, not receipts
• Unlike for-profit organizations, budget must be strictly
followed

Let’s Review 9
The budget for a merchandiser differs from a budget
for a manufacturer because:
a. A merchandise purchases budget replaces the
production budget.
b. The manufacturing budgets are not applicable.
c. None of the above.
d. Both a. and b. above.

The budget for a merchandiser differs from a budget
for a manufacturer because:
a. A merchandise purchases budget replaces the
production budget.
b. The manufacturing budgets are not applicable.
c. None of the above.
d. Both a. and b. above. (correct answer)

Copyright
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Managerial Accounting

Tools for Business Decision-Making

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A budget is an aid to management not a substitute for

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Master budget components

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• The number of units sold each quarter will be used to

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• Ending inventory calculations are, respectively: 3,500 x 20% = 700; 4,000 x

How many units should Roletter Ltd. produce in April?

How many units should Roletter Ltd. produce in April?

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• Calculation for direct materials to be purchased:

• Calculation for direct materials cost:

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• Ending inventory calculations are, respectively: 7,200 x 10% = 720; 8,200 x

• Direct labour and manufacturing overhead budgets

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• Shows both the quantity of hours and cost of direct labour

Units to Be × Direct Labour × Direct Labour Total Direct

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• Projection of anticipated operating expenses

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• Important end-product of the operating budgets

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• Next step is to determine the Cost of Goods Sold

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• Cost of Goods Sold calculation can be reported on the Budgeted on the

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