Operational Budgets

Question 1

Sales Budget

Answer 1

1. Annual Budgeted Sales Volume
2. Annual Budgeted Selling Price
3. Annual Budgeted Sales Revenue (1 x 2)

Question 2

Production Budget

Answer 2

1. Budgeted Sales Volume
2. Budgeted Closing Inventory
3. Less Opening Inventory
4. Budgeted Production Volume (1 + 2 - 3)

Question 3

Materials Usage Budget

Answer 3

1. Budgeted Production Volume
2. Material Cost Per Unit
3. Cost of Material (1 x 2)

Must be done for all materials involved

Question 4

Materials Purchase Budget

Answer 4

1. Budgeted Production Volume
2. Budgeted Closing Inventory
3. Less Opening Inventory
4. Add Budgeted Purchases Volume
5. Budgeted Purchase Price per Material Unit
6. Budgeted Purchases Volume ((1 + 2 - 3 + 4) x 5)

Question 5

Labour Budget

Answer 5

1. Budgeted Production Volume
2. Budgeted Labour Hours required per unit produced
3. Budgeted Total Labour Hours required (1 x 2)
4. Budgeted Labour Rate
5. Budgeted Total Labour Cost (3 x 4)
6. Budgeted Labour Cost per unit (1 / 5)

Question 6

Closing Inventory Budget

Answer 6

1. Budgeted Closing Inventory Volume
2. Cost Per Unit
   Material A Cost
   Material B Cost
   Labour Cost
3. Total cost per unit (Total of step 2)
4. Budgeted Closing Inventory Value (1 x 3)