The Operating Budgets: Sales, Production and Purchases

The sales budget is created first and includes the number of units expected to be sold of each product times the expected price. In this way, total sales revenue, which will feed into the budgeted income statement, is budgeted.

Example: Ellsworth Company sells two products, Product A and Product B$.$ Next year, Ellsworth expects to sell $2,500$ units of Product A at $$5$ each and $10,000$ of Product B at $$4$ each. Develop a sales budget for Ellsworth Company.

$\backslash$table$[[,$Product A$,$Product B$,$Total$],[$Units$,2,500,10,000,12,500],[$ Price,$$$$5,$$$4,$$$4\mathrm{.}20$