Running head: Operating & Financial Budget 1

Assignment 2: Operating & Financial Budget

Wasilios Kapsalis

Seton Hill University

Banderhouse Inc.

Jul 4, 2022

Introduction

“Banderhouse Inc. needs a master budget as it wants to know how the operating and

financial budget is looking for them.” (Applied Managerial Accounting: Assignment 2 -

Operating & Financial Budget, 2017) Therefore, there are several budgets created with

calculations to show the numbers for the company in order for the executives to decide what the

best next decision is to enhance their business.

Operating & Financial Budget 2

Sales Budget

(Bragg, June 11, 2022)

The sales budget shows how many units are sold with its selling price which concludes in

budgeted sales. This budget indicates that the units sold have been increasing as it went from

50,000 in January to 70,000 in March. The months afterwards (April, May) show the steadily

70,000 sold units throughout the 2nd quarter.

Production Budget
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(Bragg, May 1, 2022) The production budget is the amount of products that are being
produced throughout the quarter. Within this budget, we can see that the company wanted an
80% desired inventory and that the beginning inventory is subtracted from the quarterly
production. Thus, this results in the production units which have been increasing as well and
came up to a total of 196,000.

Direct material budget pellets

(Bragg, March 22, 2022)

The direct material budget of the pellets shows the amount of pellets being produced and

the materials needed to produce them. While the sales were increasing, the cost for materials also
Operating & Financial Budget 4

increased as you can see throughout the first quarter. Eventually, the total budgeted purchase,

through its increase in cost, started a slow decrease throughout the March as it went down by

210,000 while producing and needing more materials.

Direct material budget insulation

(Bragg, March 22, 2022)

The direct material budget of insulation shows the production and the materials needed

for the insulation of the company. As you can see in the chart, the budgeted purchases were

increasing as well since there were more units in production for the growth in sales. However, in

March the sales increased while the total budgeted purchases decreased by 45,000 from the

month February.

Direct Labor Budget

Operating & Financial Budget 5

(Bragg, May 16, 2022)

The direct labor budget shows the amount of labor that is needed for the production of the

company. The company is doing really well as it has growth in every department however, this

also increased the direct labor cost throughout the quarter. It went up to $2,625,000 while the

hourly rate has stayed the same. The total hours needed increased as well due to the increase in

production.

Overhead Budget
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(Bragg, May 24, 2022)

The overhead budget shows the total overhead for the units produced. The variable cost

and the fixed costs that show the overhead rate at every hour of production. Overall, the costs

went up as it was necessary to increase the hours needed for the sales and the production

department.

Selling and Administrative Budget

Operating & Financial Budget 7

(Bragg, March 23, 2022)

The selling and administrative budget shows the total budgeted expenses from salaries,

depreciation, shipping and other expenses. The expenses rise through the months by 15,000 per

month as the production and sales are going up as well.

Cost of Goods Sold Budget

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(Chegg, n.d.)

The cost of goods sold budget shows the amount of cost of goods sold through the

manufacturing costs of the materials and the overhead. The amount has gone up to a big number

as the sales increased and the costs did as well.

Ending Finished Goods Inventory

(Bragg, May 14, 2022)

The ending finished goods inventory shows the amount of finished goods at the end of

the budget period.

Income Statement

(Bragg, May 22, 2022)

The income statement shows that the company has a very stable company and that the net

income has been really good for them this quarter. Nearly half the sales are the costs of goods

sold.
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Cash Budget

(Bragg, March 22, 2022)

In conclusion, the cash budget shows that the company has had a very good quarter and that if it

continues like this, it will grow more and more.

References

Applied Managerial Accounting: Assignment 2 - Operating & Financial Budget. (2017,

September 19). Retrieved from Applied Managerial Accounting: Assignment 2 - Operating &

Financial Budget | Study.com

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Bragg, S. (2022, June 11). Sales budget: Sales budget example. AccountingTools. Retrieved
from Sales budget example — AccountingTools

Bragg, S. (2022, May 1). Production budget definition. AccountingTools. Retrieved from
Production budget definition — AccountingTools

Bragg, S. (2022, March 22). Material budgeting: Direct materials budget. AccountingTools.
Retrieved from Direct materials budget — AccountingTools

Bragg, S. (2022, May 16). Direct labor budget definition. AccountingTools. Retrieved from
Direct labor budget definition — AccountingTools

Bragg, S. (2022, May 24). Manufacturing overhead budget: Overhead budget. AccountingTools.
Retrieved July 4, 2022, from Manufacturing overhead budget

Bragg, S. (2022, March 23). Selling and administrative expense budget. AccountingTools.
Retrieved from Selling and administrative expense budget — AccountingTools

.Cost of goods sold budget. Chegg. (n.d.). Retrieved from Cost Of Goods Sold Budget -
Accounting

Bragg, S. (2022, May 14). Ending finished goods inventory budget definition. AccountingTools.
Retrieved from Ending Finished Goods Inventory Budget.

Bragg, S. (2022, May 22). Income statement accounts. AccountingTools. Retrieved from Income
statement accounts — AccountingTools

Bragg, S. (2022, March 22). Cash budget definition. AccountingTools. Retrieved from Cash
budget definition — AccountingTools