142k views
5 votes
Which of the following is needed to prepare a sales budget? A. Beginning inventory of finished goods. B. Desired ending inventory of raw materials.

User Fent
by
8.0k points

1 Answer

2 votes

Final answer:

To prepare a sales budget, the beginning inventory of finished goods is required, not the desired ending inventory of raw materials. The sales budget focuses on forecasting sales and ensuring sufficient finished goods inventory to meet customer demand.

Step-by-step explanation:

To prepare a sales budget, you need several pieces of information regarding your company's sales goals and operations. The two options given are A. beginning inventory of finished goods, and B. desired ending inventory of raw materials. Among these, option A, beginning inventory of finished goods, is needed to calculate the number of units you need to produce to meet sales forecasts and desired ending inventory levels.

Performing this calculation requires understanding not only how many goods you have on hand to sell, but also how many products you expect to sell in the upcoming period. You then adjust your production schedule accordingly to ensure that your inventory levels can support the anticipated sales. This is crucial as inventories are both a short-term asset on a company's balance sheet and a part of operations that can indicate how well a business is performing relative to expectations.

While desired ending inventory of raw materials is important for the production budget, it is not directly relevant to the sales budget. Instead, the sales budget focuses on anticipating customer demand and ensuring the availability of finished goods to meet that demand.

User Saed
by
8.2k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.