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Company prepares operating budget for 2014. Expects to sell 400,000 gadgets at $51...

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lorkisstrader | (Level 2) Honors

Posted April 28, 2013 at 11:24 PM via web

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Company prepares operating budget for 2014. Expects to sell 400,000 gadgets at $51 each. Prepare a sales budget.

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sciencesolve | Teacher | (Level 3) Educator Emeritus

Posted May 26, 2013 at 6:38 PM (Answer #1)

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It is important to note that in business operations, the sales budget is usually the first budget prepared, not the last, because all other budgets are expected to arise from the sales budget.

You should draw a table whose first row contains the number of unit sales expected, the second row contains the average expected unit price and the third row contains the total revenues such that:

The number of unit sales expected: 400 000

Price per unit: $51

Total revenues: 400 000* $51 = $20 400 000

You can make price adjustments in case of marketing promotions, hence, if the company anticipates sales discounts, then, the sales budget needs to contain this information.

Hence, preparing the sales budget, under the given conditions, yields the net total value of sales of $20 400 000.

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