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
What it is
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?