Imagine that you own a sandwich shop and you have 2 employees. For this exercise, develop the operating portion of a master budget.

You need to create seven independent budgets and a budgeted income statement:

No. 1 sales budget

No. 2 production budget,

No. 3 direct materials budget

No. 4 direct labor budget

No. 5 manufacturing overhead budget

No. 6 selling

No. 7 administrative expense budget

No. 8 budgeted income statement