 Everything starts with the sales budget. It would be impossible to know how many units to produce or purchase without first knowing how many units we're going to sell. You can see from the master budget that the sales budget starts the process. In order to create a sales budget, we start with the most basic calculation, which is sales units times selling price equals total sales revenue. The sales budget can be created for an annual amount or quarterly amounts or more commonly monthly amounts. A sales budget is also usually prepared by product, where a company lists its top five or ten products and then all others together. A sales budget could be prepared by a region or by sales person. And by customer, where a company's top five or top ten customers are listed and then all others combined. So the sales budget is a much bigger process than what you'll learn about in an accounting principles course. But this is because companies want to look at sales from a lot of different perspectives in order to determine strengths and weaknesses in their current business model. But regardless of how many ways the data is budgeted and analyzed, the total sales revenue always adds up to the original budgeted amount, which in my example is two million dollars of revenue. So the examples that I'll be using for the budget videos I've chosen to go with the quarterly budgets. This will give us a few periods to work with without the overwhelming size of monthly budgets. Finally, let me talk a moment about Microsoft Excel. Although budgeting software exists, most companies, even very large companies, use Excel to build budgeting templates. In fact, I built a budgeting template once that automatically synced department salaries and operating expenses for 157 different departments, rolling the amounts into direct labor, manufacturing overhead, and operating expenses budget, and providing real time budget data as changes and modifications were made. And I did all of that in Excel. So I'll be showing you how to use basic Excel functions to link budgets together. In this example, you can see the formulas used to arrive at total sales revenue by quarter and annually, as well as the total sales volume annually.