From the course: Accounting Foundations: Budgeting

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Master budget exercise: The sales budget

Master budget exercise: The sales budget

From the course: Accounting Foundations: Budgeting

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Master budget exercise: The sales budget

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- To help understand the budgeting process in a manufacturing firm, we're going to use a fictitious example, the Brigham Boat Company. Brigham Boat Company is a manufacturing company that makes fishing boats. The boats are made of wood and Brigham only makes one type, a 15 foot fishing boat. We'll begin our master budget with perhaps the most important budget component, the sales budget. The sales budget always begins the budgeting process and drives many of the related budgets. For example, how much inventory we make is a function of how much we're going to sell. How much inventory we determine to make then drives how much material we need to purchase. How many workers we need to hire and so on. So to begin this budgeting exercise for Brigham Boat Company, it's a good idea to first note where we're starting. At the start of this year, 2019 in this case, we had the following asset, liability and equity account balances from our balance sheet. We have cash in the bank totalling…

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