Revenue budget
Revenue budget forecasts the units to be sold and the total revenue expected in a period. Also called the sales budget, it is prepared first and is the starting point from which the other operating budgets derive.
Also known assales budget
FrameworkMaster budgeting
See it move
A tree diagram decomposes budgeted revenue of €140,000 into the two inputs that produce it: 40,000 jars of units sold on the left branch and a selling price of €3.50 per jar on the right. Multiplying the two gives the root figure of €140,000. The revenue budget is the first schedule completed in the master budget because every downstream plan — production quantities, materials, labour — depends on the expected number of units to be sold.
The formula
Variables
- Budgeted units to be sold
- Selling price per unit (€/unit)
Built from the two inputs — volume forecast and expected price — that drive every downstream operating budget.
Check yourself
A manager at a food company is building next quarter's master budget and must decide which budget to prepare first. Which option correctly identifies that budget and explains why?