 Hello in this lecture we're going to continue on with our master budget and we're going to move on to the budgeted income statement at this point. So a quick recap once again we're going to go through the whole thing here just this does have to be done in order if we break it down into its pieces it's not too bad but we do have to start off with a sales budget then a production budget raw materials budget direct labor budget factory overhead budget selling expense budget general administrative budget and then we had some cash worksheets to help us out with the cash budget and then we did the cost of goods manufactured budget and now we're going to scroll down to the cost of goods sold budget those two items are going to be needed in order for us basically just to get that number on cost of goods sold for us to calculate on our income statement which is where we are at now now of course an income statement is basically income expenses we're going to start off with income called sales in this case so we're going to total sales and we're going to pull that from up above so we're going to say this equals and we're going to scroll all the way up top to where we had the sales number all the way up here that's that one million four four seven two of sales that we will have then we're going to calculate the next number will be the cost of goods sold I'm just going to say this equals what the cost of goods sold is up there where we calculated it on the cost of goods sold calculation and that will then equal what we calculated up here this one million one ninety one eight sixty five we have there and then the sales minus the cost of goods sold will be the growth I'm going to undo that undo that that'll be the gross profit and we're going to subtract that out so our cost goods sold is kind of like our main expense so we're going to say this minus the big expense that's expense related to basically inventory and then we then are going to scroll down to the next set of items those items are going to be operating expenses expenses colon and we're going to start off with sales commission sales commission is going to be an expense and it's not included in the production process it's not up here it's going to be down here and kind of like the period cost generally and so we're going to say that equals and we're going to scroll up to the area where we calculated the sales items so we have the sales commission here and it's going to be the sum of all of those so I'm going to just k equals the sum of the sales commission for july august september we also could have got it from the cash flow budget because we did pay cash for this so it would be on the cash flow budget as well then we're going to have the sales salary sales salaries and we're going to say the same thing and say this equals and once again we could take it from from the sales budget as well but i'm going to go back up here to our uh i mean we could take it from the cash flow budget as well but i'm going to go up to this here