Exam (elaborations)
BUS 5110 Unit 5 Discussion Assignment
- Course
- Institution
A guide to calculating income budget statement for Unilever plc. It includes preparing sales budget, production budget, and rollover budget.
[Show more]
Seller
Follow
MasterAddis
Reviews received
Content preview
The company I selected in unit 2 was Unilever Nigeria plc. Unilever uses Zero-based budgetingwhich is a budgeting approach that involves developing a new budget from scratch every time
rather than relying on the previous period's budget. In developing a budgeted income statement
they first prepare the sales budget.
A sales budget is the management’s estimation of sales for a future financial period (Greyling,
2021). Unilever uses internal sales staff and external researchers to prepare sales forecasts. The
chief marketing officer will oversee the whole process. The line items we have in the sales
budget include the sales in units, sales price per unit, and sales revenue. The sales in units are
calculated by multiplying last year's sales in that quarter by the expected percentage increase
provided by the professionals above.
The production budget is prepared based on the sales budget prepared above. However, a certain
level of ending finished goods inventory is required additionally there may be a finished goods
inventory that has rolled over from the last quarter. The desired ending finished goods inventory
will be a percentage of next quarter's sales in units. This value is added to the sales in units to
give the total finished goods inventory. Next, we deduct the beginning finished goods inventory
which gives us the units to be produced.
Unilever uses a rolling budget approach to ensure the planning process is kept ongoing. A rolling
budget is continually updated to add a new budget period as the most recent budget period is
completed (Bragg, 2021a). It operates in a system where a yearly budget of units and resources is
divided into quarterly periods. All these are coupled with bottom-up forecasting where the
budget process starts from lower-level employees then goes up the ladder to top management.
The direct materials purchases budget is used to assess the units of raw materials required to
achieve a desired level of production. The materials required per unit multiplied by the sales in
units will give us the materials needed in production. However, we have to know the beginning
and ending inventory levels required. The direct materials cost per unit is equal to the materials
required per unit multiplied by the unit cost. The production manager will provide budgeting
information.
The direct labor budget will show the total direct labor hours needed for production that we get
by multiplying the units to be produced by the direct labor hours per unit. Then we multiply this
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller MasterAddis. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now