Sales budget planning for customer service

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all right class today we're going to be looking at some of the budgets in the budgeting chapter the first budget we're going to look at is the sales budget and then after this we're going to do a video on the production budget and after that we'll do a budget on the direct materials okay so those are three of the most common budgets there are more and in the future I'll take some more videos on those but those are easier budgets these three budgets this one's pretty easy but the production budget and the direct materials budget those two are a little bit complicated so that's really why I want to do videos on this but it all starts with the sales budget the sales budget will drive the other budgets okay so first of all this is generally how the sales budgets gonna look it's gonna be by month and then you're gonna have the units that you're gonna sell the price so you need your total sales and that's pretty much the sales budget right there now afterwards would you like to take these numbers and figure out how much of these sales are cash and how much are credit because these total sales that we're going to calculate that's not cash that's just our sales number okay some of those might be cash sales but others are going to be on accounts okay on account receivable so we need to know how much is cash and how much is credit because later we're gonna prepare a cash budget and for a cash budget this sales number that we're gonna calculate a second is not a cash figure typically it's part cash part credit so then we've got to figure out well how are we gonna get those credit sales you know maybe we get the credit sales all in the following month okay well then that means the cash would come you know for sales for January than our cash would come in February all right we'll take a look at that a little bit later in this video all right so first let's start with the sales budget so usually you want to set it up some in this type of format and then the problem in your homework or on tests they're gonna tell you they've got to tell you what the sales are okay what the units are you're not gonna be able to just guess that number somehow you're gonna have to figure out it's just gonna plain tell you what it is right so in my example I say that that sales are 10,000 units in January 12,000 units in February and 11,000 in March so we'll just plug those numbers in is I've got 10,000 in January 12,000 in February and the 11,000 in March all right and then the problem has to tell you well what's the sales price for these items okay so let me back up just a second what we're manufacturing here are cases of salsa okay we manufactured cases of salsa so we anticipate we have 10,000 units or 10,000 cases sold in January 12,000 sold in February and we're budgeting 11,000 cases sold in March the price per case is $10 so we'll plug in $10 for our price I'm going to put a line here because we're gonna have to multiply these together so our sales are gonna be in January a hundred thousand dollars of sales okay in February it'll be 120 thousand because it's twelve thousand times ten and in March it'll be a hundred and ten thousand right so there are our sales figure now once again like I said before this is not cash this is our sales figure right so down here how how what what type of sales aren't these well we got cash and credit and the problem has to tell you the difference between the two so for cash our sales are generally about thirty percent cash so then the remaining 70 percent would need to be credit all right so then for January our cash sales are 30,000 and our credit sales are 70,000 and you can see that that adds up to our hundred thousand for February our cash sales than would be 30% times 120 thousand which is 36 thousand is what we're budgeting if our sales to be in cash and our credit sales in February then would be eighty four thousand and that adds up to one hundred and twenty thousand all right and then in March it would be thirty three thousand cash and seventy seven thousand for it alright so here's the breakdown of our sales in cash and credit all right so like I said at the beginning of this video later we're gonna prepare a cash budget all right so when we heard the cash budget we want to know well how much cash are we getting each month all right so let's go to February if we were gonna figure out our February cash budget well we have thirty six thousand in cash that we're gonna receive that's what we're budgeting so we've got thirty six thousand in cash here this 84,000 is credit all right so this more than likely we're not going to receive this in February most likely receive most of it in March all right so this would not be cash in February what about this seventy thousand right here this is our credit sales in January more than likely we're gonna receive that in February okay so our cash collections in February might be the thirty six thousand plus the seventy thousand all right now that's just an example you know you have to look at your homework problems and on test they don't tell you it has to tell you how it's gonna receive these accounts this credit okay the pub has to tell you they might say we anticipate we're gonna receive all of these in in the following month okay well then you would say okay well we received 70,000 in in February for this example is 84,000 of them be received in March or might say we received 50% of this in the following month and 50 remaining 50% two months out so then you would say okay well 50% is 35,000 so 35,000 you received here and then the other 35,000 received in March okay alright so anyway later when I do a cash budget we'll use these numbers right so I'm gonna erase this for now because the next video I'm gonna stop this video but I'm gonna do the next video which is the production bit video the production video is going to start with these sales numbers so when I start the production video I'm gonna have these on the board just this this pole right there the hundred thousand one hundred and twenty and one hundred and ten because we need that in order to start production in production is how many cases do we need to produce each month alright okay class hope you got that and we'll do the production video in just a second