Preparing an Operating Budget—Cost of Goods Sold, SG&A, and Operating Income

Print this page

Example of cost of goods sold forecast

In estimating line item expenses, be aware of break-points in production capacity that signal the need for additional outlays. For example, if you currently need 3 people to produce 10,000 orders a month, and you estimate that during the next year sales will increase by 20% to 12,000, at what point will you need to add additional staff to handle the extra volume?

Cost of Goods Sold: Year 2 Budget



Year 1

Year 2 Budget

Rate of Change

Cost of goods sold:

Direct labor








Direct materials




Total cost of goods sold




Click here to exit the program. Warning, this will close your session. You will be able to return to the course, but any evaluation of your progress/performance will not count after you have clicked this button.