All 34 The Master Budget questions
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What is a budgeted income statement used for? In what order are the components of the master budget prepared? How is the budgeted income statement prepared? How does the cash budget fit within the master budget? Why must the budgeted balance sheet balance, and what if it doesn't? What is the relationship between the master budget and responsibility accounting? How does the sales budget flow through to the budgeted balance sheet? What is the difference between the operating cycle and the master budget? How is depreciation handled across the master budget statements? What is the link between budgeted contribution and the master budget?
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Budgeting & Forecasting › The Master Budget

What is the cost of goods sold budget and how does it link inventory budgets?

Intermediate

Answer

The COGS budget computes the cost of units sold using the production cost per unit and the sales volume, adjusted for opening and closing finished-goods inventory. It draws on the materials, labor, and overhead budgets (for unit cost) and the inventory budget, and feeds the budgeted income statement's cost of sales line.
Opening FG 40,000 + Production cost 300,000 - Closing FG 50,000 = COGS 290,000.
Real-world example The COGS budget uses unit costs and inventory movements to derive cost of sales for the budgeted P&L.

Common follow-ups: What inputs does it need? | How does inventory affect COGS?

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All 34 The Master Budget questions