Page 142 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 7: Budgeting

3. In the III department of Light does not have any change in the volume of existing sales, Notes
it means that 1,80,000 units has to be retained as it is in the computation of the budgeted

figure but in the case of Elite, department III expected to have an increase in the volume of
sales which amounted 20,000 units i.e. 70,000 units.
Sales Budget for the Year 2006

Light `3 Elite `1.20 Total
Selling Price
Quantity ` Quantity ` `
Department I 3,00,000 9,00,000 5,75,000 6,90,000 15,90,000
Department II 6,75,000 20,25,000 7,20,000 8,64,000 28,89,000
Department III 1,80,000 5,40,000 70,000 84,000 6,24,000
11,55,000 4,65,000 13,65,000 16,38,000 51,03,000
7.2.4 Sales Overhead Budget

It is one of the important sub functional budgets, prepared by the sales manager who is
responsible for the sales volume of the enterprise to increase through various devices/tools of
sales promotion.
The sales overhead can be classified into two categories viz fixed sales overhead and variable

sales overhead.
What is meant by the Fixed Sales Overhead?
Fixed sales overhead is the expenses incurred for promoting the sales, which remains the same

or fixed irrespective of the volume of the sales.

Example: 1. Salaries to Sales Department
2. Salaries to the Administrative Staff
3. Salary to Salesmen
Variable sales overhead is the expenses incurred for the promotion of the sales, which is varying
along with the volume of sales of the fi rm.

Example: 1. Sales commission

2. Agents commission
3. Carriage outward expenses.
The sales overhead budget is the statement of estimates of the various sales promotional expenses
not only based on the early/yester period sales promotional expenses but also on the sales of
previous years.

Example: The following expenses were extracted from the books of M/s Sudhir & Sons,
to prepare the sales overhead budget for the year 2006.
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Radio 2,000
Television 12,000

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