Sales budget is the first and basic component of master budget and it shows the expected number of sales

units of a period
Total Sales = Sales Units x Price per Unit

Units sold 10,000

Price/unit £ 100
Total sales value = 10,000 x 100 = £ 1,000,000

Production Budget
Units
Sales 10,000
Less: Opening stock 800
Add: Closing Stock 880
( Opening stock + 10% opening stock )
Prodution required 10,080

The direct materials usage budget

Each unit of PR, 5 unit of direct material P and 10 units of raw material R are need
So:
Direct material :
P: 5 x 10,080 = 50,400 units
R : 10 x 10, 080 = 100,800 units

Direct Labour Budget

Maching Assembling
Production units 10,080 10,080
x direct labour hours required x1 x 0.5
x direct labour rate per hour x £6 x £8
Direct labour cost 60,480 40,320

The cost of goods sold is the cost of the merchandise that a retailer, distributor, or manufacturer has sold.
COGS= Units sold x price per unit = Opening stock + Manufaturing cost - Closing stock

Unit cost : £ £
Direct material P: 5 units x £3 per unit 15
Direct material R: 10 units x £4 per unit 40
Total direct material cost per unit 55
Direct labour for
Machining : 1 hour x £ 6 per 6
Assembling : 0.5 hour x £ 8 per 4
Total direct labour cost per unit 10
Total direct cost 65

Closing stock value = Opening stock value + 10% Opening stock value = Total direct cost per unit x units in closing stock = 5
COGS = total direct per unit x Units sold = 65 x 10,000= 650,000
 £
Opening stock 52,000
Manufacturing cost 655,200
(Production units x total direct cost)
(10,080x £65 )
Less : Closing stock 57,200
COGS 650,000

Printing Rite Ltd

Budgeted Income Statement
For the year ended December 31 ,2017
£
Sales 1,000,000
Less: COGS 650,000
Gross profit 350,000
Less: Fixed production overhead 100,000
Less: Depreciation ( 20% x £250,000 ) 50,000
( 20% Fixed assets)
Less : Administration, selling and distribution
overhead
150,000
Budget net income 50,000
number of sales units of a period and the expected price per unit.

Direct Material Budget

Units Units
P R
Usage 50,400 100,800
Less: opening stock 4,500 12,000
Add : Closing stock 4,950 13,200
( Opening stock + 10% opening stock)
Direct material 50,850 102,000
x £3 x £4
Direct material purchases 152,550 408,000

turer has sold.

r unit x units in closing stock = 52,000+ 10% x52,000 = 65 x 880 = 57,200