From the course: Accounting Foundations: Budgeting

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Budgeting for merchandising firms

Budgeting for merchandising firms

From the course: Accounting Foundations: Budgeting

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Budgeting for merchandising firms

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- Brigham Boat Company is a manufacturing firm. We saw their operational budgets for making boats in a prior example. So, how do operational budgets work for merchandising firms, retail and wholesale, such as Wind River, a company that buys boats for resale? They buy them from other manufacturers rather than making the boats themselves. Or for a service firm, such as Boulder View Inn, a small motel. Now, there are several similarities in the budgeting process for manufacturing businesses, merchandising companies, and service companies. Basically, the budgeting process involves budgeting, or forecasting revenues, and the cash that will be generated by those revenues, as well as budgeting expenses and the cash that will be paid for those expenses. Because merchandising companies buy products rather than making them, their budgeting process is less complicated than the budgeting process done by manufacturing companies. For example, if Brigham Boat Company were a merchandising firm that…

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