Cost of Sales Budget

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Computation requires estimates of beginning and ending levels of work-in-process and finished goods inventories.
If WIP levels are assumed to be constant, the calculation reduces to:

  • Estimated cost of sales= Estimated production costs + Budgeted cost of beginning inventory – Budgeted cost of ending inventory

Estimated production costs consist of estimated materials costs, labor costs, and overhead costs from the previous budgeted amounts.

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