Consider the following statement: It is most
sensible to start with the sales budget and develop...

Question

Consider the following statement: It is most 
sensible to start with the sales budget and develop the other budget 
from there. After what you have learned this week with regards to budget
 processes and procedures, analyse the validity of this statement. Do 
you agree with the statement? Justify your answer based on the week’s 
readings. How should sales revenues be considered when determining other
 costs? need 750 words, use 3-4 references including the attached reading material( publication and book(Atrill & McLaney 2012) please make sure it is checked for plagiarism as last time had really high return and i will ask for refund if that is the case again. try to use one example from your own experience or from the web. the deadline is in 30 hours from now. but please don't copy and paste from internet as plagiarism level allowed is 9% and please your response to be related to the attached reading material.

David · Accepted Answer

Introduction 
Budgeting is a wide term and it includes various types of budgets depending upon the 
requirement of the organization, collectively they are called as the master budget. Master budget 
is the summary of various plans of company. Master budget includes sales budget, purchase 
budget, raw material budget, labor budget, cash budget, Selling and admin budget, 
manufacturing overhead budget. (Charles T. Horngren, Srikant M. Datar and Madhav Rajan)
Different budgets are produced in different functional areas and are then combined to prepare a 
master budget. Budgets are usually prepared on monthly, quarterly, semi-annually and yearly 
basis. Master budget acts as a planning and control tool to the management which helps in 
managing various activities. Master budget is usually divided in two parts one is operational and 
another financial. Operational part includes income statement and the budgets supporting it such 
as sales budget, operating expense budget etc. whereas financial budget analyzes the impact of 
operating budget on the cash of the organization and includes cash budget, balance sheet etc. 
(http://www.nfib.com/business-resources/business-resources-item?cmsid=47095)
Preparing a budget is very important for the success of any organization. The external and 
internal environment is very turbulent and it becomes necessary for firms to prepare themselves 
for the changing environment. Budgeting is method of forecasting the future. A company 
prepares various budgets to estimate its activities in future. Yes it involves a lot of time and 
expense, but at the same time it is very important to prepare budgets. Budgets are used to 
estimate all the revenues and costs and then plan accordingly. Planning cannot be done without 
http://www.nfib.com/business-resources/business-resources-item?cmsid=47095
preparing budgets. Another important use of budgets is that it is very useful in estimating the 
performance. (http://www.journalofaccountancy.com/Issues/2001/Dec/BudgetsOnARoll.

Consider the following statement: It is most sensible to start with the sales budget and develop the other budget from there. After what you have learned this week with regards to budget processes and...

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