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Appendix C Budgets Matrix
Directions: Using the matrix, define each of the budgets listed and briefly describe its uses.
Sales budget Production budget
Definition Derived from the sales forecast Shows the units that must be produced to meet anticipated sales Shows both the quantity and cost of direct materials to be purchased. Contains the quantity of time (hours) and cost of direct labor that meets production requirements Shows the expected costs for the budgeted period Projects selling and administrative expenses Important end-product of the operating budget Shows anticipated cash flow
Direct materials budget Direct labor budget
Describe its uses represents managements best estimate of sales revenue for the budget period. Excessive inventories in one quarter may lead to cutbacks in production and employee layoffs in a subsequent quarter Inadequate inventories could result in temporary shutdown of production Puts a limit on the amount of time a company works its own employees Budgets everything from maintenance to direct labor hours during a manufacturing period Expenses classified as either variable or fixed Indicates the expected profitability of operations during a budget year Shows cash receipts, cash disbursements, and financial statements
Manufacturing overhead budget
Selling and administrative expense budget Budgeted income statement Cash budget
ACC 220 .