Budget Assumptions

Budget Assumptions

A master budget is based on various estimates and assumptions. For example, the sales budget requires three estimates/assumptions:

1. What are the budgeted unit sales?
2. What is the budgeted selling price per unit?
3. What percentage of accounts receivable will be collected in the current and subsequent periods?

When Microsoft Excel© is used to create a master budget, these types of assumptions can be depicted in a Budget Assumptions tab, thereby enabling an Excel-based budget to answer “what-if” questions.

Over to you

Have you seen the “budget assumptions” tab in Microsoft Excel? If you haven’t, take this opportunity to look into it.