Question

Which of the following is needed to prepare a sales budget?

Multiple choice question.
- Beginning inventory of finished goods
- Desired ending inventory of raw materials
- Desired ending inventory
- The budgeted number of units to be sold

Answer 1

To prepare a sales budget, you need the budgeted number of units to be sold and the desired ending inventory of raw materials.

Step-by-step explanation:

The sales budget is a key component of the overall budgeting process for a business. It helps to determine the expected revenue from sales and sets targets for the sales team to achieve. In order to prepare a sales budget, two key factors are needed:

1. The budgeted number of units to be sold: This refers to the estimated quantity of products or services that the business expects to sell during a specific period. It is important to consider factors such as market demand, sales history, and any anticipated changes in customer behavior.
2. Desired ending inventory of raw materials: Raw materials are the inputs or components that are used to produce the products or services being sold. The desired ending inventory represents the quantity of raw materials that the business aims to have at the end of the budget period to meet production needs and maintain a smooth workflow.

By considering the budgeted number of units to be sold and the desired ending inventory of raw materials, the sales budget can be developed to guide the business's sales activities and help in making informed decisions regarding production and resource allocation.