Budgeting

• sales budget

  quantity sold

  x selling price

  = total sales
• labour budget

  production (units)

  x hrs per unit

  = total hrs required

  x rate per hr

  = total costs
• production budget

  opening inventory

  add production

  less sales

  closing inventory
• purchases budget

  opening inventory

  add purchases

  less sales

  closing inventory
• cash budget

  receipts:

  cash sales

  credit sales

  payments:

  cash purchases

  credit purchases

  rent

  other expenses

  drawings

  loan repayments

  net cash flow

  opening balance

  closing balance