222

$show=home

Welcome to Accounting Education

The Accounting University with 3400+ Accounting contents as study material which can watch, read and learn anyone, anywhere.

Start your studies

$show=home

Journal Entries $type=three$count=6$author=hide$comment=hide$label=hide$date=hide$show=home$s=0

Balance Sheet $type=three$count=6$author=hide$comment=hide$label=hide$date=hide$show=home$s=0

How to Calculate Budgeted Cost of Goods Sold

For preparing budgeted income statement, we need to calculate the budgeted cost of goods sold. First of all, you should understand the actual cost of goods sold. After this you can understand budgeted cost of goods sold. Actual cost of goods sold means the cost of products which have been sold to our customer.


We can calculate this cost by following simple formula.

 Opening stock + purchase + direct expenses - closing stock

or Opening Stock ( Raw material + W.I.P. + Finished Goods) + Purchase (Raw material) + Direct Expenses ( Direct labor cost+ manufacturing overheads) - Closing stock  ( Raw material + W.I.P. + Finished Goods

 {In manufacturing organisation, we calculate opening stock by adding the opening stock of raw material, opening stock of work in process and opening stock of finished goods. Purchase will be only of raw material. In direct expenses, we will include the direct labor cost and manufacturing overheads. We calculate the closing stock by adding the closing stock of raw material, closing stock of WIP and closing stock of finished goods. After this, we apply above formula}

 Budgeted cost of goods sold is estimated cost of goods which will be sold to customers upto the end of the year.

We will follow the following steps for calculating it.

 1st Step : To Calculated Budgeted Sales

 This is the first step which you will take for finding the budgeted cost of goods sold. You can not find the budgeted cost of goods sold, if you did not find the budgeted sale. Budgeted sale means expected quantity of goods which you will sell within one year. There are lots of factor which affects this. Demand of customer may increase or may decrease. So, you have to set the quantity you will sell. It may be actual sale + 10% increase in previous sale quantity or  actual sale - 10% decrease in previous sale quantity.

 2nd Step : To Calculated Budgeted Purchase

  After calculating, budgeted sales quantity, you have to calculate the budgeted purchase quantity and budgeted purchase price per unit. You also have to fix, how much will you have to buy on credit and on cash?

 a) Budgeted purchase quantity 

 Budgeted purchase quantity will depend on the budgeted sale quantity, opening balance of raw material, opening balance of W.I.P. and Opening balance of finished goods. After study all these factors, we can fix the budgeted purchase quantity.

 b) Budgeted purchase price 

Budgeted purchase price  may be fix on the basis of market trend, your past dealing and your bought quantity. So, after study this, you can fix budgeted purchase price.

 c) Budgeted Credit and Cash Purchase 

Budgeted cash purchase depends on the fund in your pocket. So, study the cash budget for this. Rest you have to buy through credit. Its total will be total budgeted purchase. We will deduct estimated purchase return out of this. In end, net budgeted purchase will be the part of calculating budgeted cost of goods sold.

 3rd Step : To Calculated Budgeted Direct Expenses

In budgeted direct expenses, you should include the budgeted direct labor cost and manufacturing overheads. It depends on the labor laws and estimated money available for this and estimated production.

4th Step : To Calculated Budgeted Closing Inventory

We can calculate budgeted closing inventory with following way.
Beginning Inventory ( Actual Quantity)XXXXXXXX
Add: Forecasted Purchase during the year ( in Quantity)XXXXXXXX
Less: Forecasted Sale  During the Year ( in Quantity)XXXXXXXX
Equals:  Ending Inventory ( in Quantity)XXXXXXXX
Now, one the basis of budgeted purchase price, we can calculate average cost per unit of inventory. On this basis, we can calculate budgeted cost of goods sold.

Example : After calculating the figures from above steps, we can calculate budgeted cost of goods sold. See following example:-


Comments

: 2
  1. i am very happy. i am getting good knowledge in account.i have no word to say about my dear sir VINOD.I JOIN TWO DAYS.


    WITH REGARDS
    RAKESH KUMAR MISHRA

    ReplyDelete
  2. Hey Vinod, this is very well explained, very crisp and very quick referencener.
    I searched 3-4 other websites but yours explanation is far above average.
    Many Thanks...!!

    Regards,

    Jinal Sh

    ReplyDelete
In comment, you can give your feedback, reviews, ideas for improving content or ask question relating to written content.

 


Name

access,2,account,86,accountant,95,Accounting,683,accounting definitions,99,accounting ebook,3,Accounting education,85,Accounting Education Ads Help,1,accounting procedure,2,accounting process outsourcing,2,Accounting Software,52,advance,3,advertising,6,africa,7,Amalgamation,6,amendments,16,Amortization,1,announcements,62,Annuity,2,assets,53,audit,47,auditing,41,Australia,2,B.Com.,22,balance sheet,87,bank,111,Bank reconciliation,12,banking,33,basic accounting,110,BBA,1,benefits,13,best,50,bill,12,black money,3,blog,12,bloggers,7,book keeping,4,bookkeeping,3,Branch Accounting - full tutorial,8,budget,35,Budget variance,13,business,65,businessman,9,CA,30,calculator,4,canada,3,capital,72,capital budgeting,27,career,21,cash,40,cash book,8,cash flow statement,11,Chiense,1,children,13,china,6,class,3,coaching,2,coins,2,college,6,commerce,10,commerce students,7,company,36,computer,9,computer accounting,1,conference,4,Contact vinod kumar,1,Control Your Spending,27,corporate accounting,69,cost,160,cost accounting,195,cost center,8,cost centre,1,CPA,2,credit,18,credit card,11,cs,10,currency,35,data,11,Debit and credit,17,debit cards,1,debt,62,debtor,21,degree,6,depletion,2,depreciation,38,Diwali Messages,12,documents,4,dollar,5,domain,3,Downloads,3,Dubai,1,e-accounting,17,earning,17,education,246,Education Loans,6,email,15,employee,4,EPF,2,ERP,7,euromoney,1,examination,7,excel,17,excise duty,6,expenses,65,facebook,7,factor of loan,1,fans,2,feature,32,fifo,5,FII,4,fiji,1,finacle,1,finance,823,Finance Journal Entries,6,Financial,134,financial accounting,147,Financial Statements,4,fire insurance,3,flickr,2,flow,4,forensic,4,forex,21,formula,8,france,1,fraud,6,free,2,fun,34,function,1,fund,48,GAAP,36,GDP,1,gdr,5,germany,1,gold,7,goodwill,4,goodwill accounting,3,google,34,google apps,3,google apps,1,google base,1,google buzz,1,google calendar,1,Google docs,38,google finance,3,google fusion tables,1,google talk,5,govt.,5,GST,33,guide,85,health,6,Hindi,2,Hindi Language,3,history,3,holding company,3,How to treat FBT in Tally 9,1,HRA,3,ICAI,11,ICAWI,3,ICICI Bank,1,IFRS,11,income,17,income statement,19,Income Tax,7,India,57,indian railway,1,Indonesia,1,inflation,4,inflation accounting,3,infographics,8,information,7,inspiration,176,insurance,14,insurance accounting,2,Intangible,3,interest,26,international,7,Internet,40,Introduction of Tally 9,1,inventory,41,investment,135,investment in Shares,6,invoice,3,IT,1,Japan,1,Job costing,4,journal entries,143,Journal Entries eBook Help,4,Kalculate,1,keyboard,3,kuwait,2,laptop,2,law,4,LBT,1,learning,36,lease,5,lecture,11,ledger,17,leducation,1,Leverage Analysis,7,liabilities,16,lifo,3,linkedin,1,loan,74,logical point,1,loss,5,loss of profit,1,M.Com.,5,m.phil,2,malaysia,3,management accounting,129,manual accounting,4,manufacturing account,1,market,11,marketing,3,mastercard,2,material,13,MBA,14,MCA,1,media,4,migration,2,mobile,9,money,61,ms word,3,ms. excel,14,multi currency in tally 9,1,Multicurrency Accounting,3,mutual fund,30,national security,1,new and sacrifice ratio,1,new york times,1,new zealand,1,news,1,NGO,5,nonprofit-accounting,6,North Georgia Mountains,1,Notification,1,NPV,17,NSE,1,odbc,2,office,10,oman,1,online application,2,online accounting,11,Online Accounting Course,5,otcei,1,pakistan,3,parents,3,Partnership,1,pay pal,3,pdf,4,Personal Finance,6,pie chart,1,pie chart of income,2,pnb,5,podcast,1,ppf,1,presentation,10,price,7,privacy policy,2,prof. vinod kumar,13,profit,24,profit and loss account,12,project management,11,provision,14,purchase,9,puzzles,2,quickbooks,2,Quote,22,quotes,42,quotes of svtuition,1,rating agency,2,ratio analysis,34,RBI,7,readers,13,real estate,13,rectification of errors,11,remote control,2,reports,10,reserves,8,responsibility accounting,4,retirement,2,revenue,3,Revenue reserves,2,review,7,risk,11,rupees,9,salary,5,sale,12,SAP,3,saudi arabia,1,saving,19,sbi,9,scholarship,2,school,1,SEBI,13,security,30,service tax,23,share,20,share trading,15,Shares,16,shri lanka,3,singapore,2,sms,6,social accounting,7,society,5,solution,219,South Africa,1,stock,24,stock exchange,22,structure,6,student,39,students,70,study,21,subsidiary company,2,svtuition,14,swiss bank,2,tally,100,tally 9,8,Tally 7.2,8,Tally 9,42,Tally.ERP 9,59,TallyPrime,1,tanzania,2,tax,94,Tax Accounting,30,TDS,15,teacher,62,teaching,112,technology,33,test,40,testimonial,15,testimonials,15,thailand,1,tips,60,trading,5,trading on equity,2,transaction,7,trend,12,trial balance,14,truthfulness,1,tuition,3,twitter,10,UAE,5,UGC - NET Commerce,13,UK,11,United Arab Emirates,1,university,9,usa,25,valuation,9,VAT,22,Video,36,Voucher and vouching,4,Wealth,8,wikipedia,25,working capital,29,youtube,14,
ltr
item
Accounting Education: How to Calculate Budgeted Cost of Goods Sold
How to Calculate Budgeted Cost of Goods Sold
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgjhIhCzvRh_RW2FQRPEJrBJwpjD2J3H0em9eU4m-sg9AuUq91z0r_KDQPpr5X5Pr29Ai_M9YA5cU9uIdooPyJ15m_X0fFsHwht5lQwvgwlsHs-1-NAIdOuT7ZnH-kPlUeUKUpvMMTlCN1H/s640/budgeted+cost+of+goods+sold.PNG
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgjhIhCzvRh_RW2FQRPEJrBJwpjD2J3H0em9eU4m-sg9AuUq91z0r_KDQPpr5X5Pr29Ai_M9YA5cU9uIdooPyJ15m_X0fFsHwht5lQwvgwlsHs-1-NAIdOuT7ZnH-kPlUeUKUpvMMTlCN1H/s72-c/budgeted+cost+of+goods+sold.PNG
Accounting Education
https://www.svtuition.org/2012/12/how-to-calculate-budgeted-cost-of-goods.html
https://www.svtuition.org/
https://www.svtuition.org/
https://www.svtuition.org/2012/12/how-to-calculate-budgeted-cost-of-goods.html
true
2410664366776677676
UTF-8
Loaded All Posts Not found any posts VIEW ALL Reply Cancel reply Delete By Home PAGES Contents View All RELATED CONTENTS FOR YOUR LEARNING Topic ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy