ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The production budget is designed by the management to estimate the number of products to be manufactured. It is designed based on the sales forecast and the budgeted amount of finished inventory.

Detailed explanation-2: -The sales budget is actually very simple. It is calculated as: sales budget = sales volume (units) × selling price per unit.

Detailed explanation-3: -The cost of goods sold (COGS) budget is essentially part of your operating budget. COGS is the direct expense or cost of the production for the goods sold by a business. These expenses include the costs of raw material and labor but do not include indirect costs such as that of employing a salesperson.

Detailed explanation-4: -Sales Budget: The degree of accuracy with which sales are estimated will determine the practicability of operating budgets. A sales budget is the starting point on which other budgets are also based. A sales budget lays down potential sales figures in value as well as in quantity.