 Hello in this lecture, we're going to continue on with the master budget part 5 We're going to continue with the income statement So if you haven't looked at the prior budget, you want to probably look at the prior budgets We are we'll be using part of them in order to create the budgeted income statement after this We will be able to list components of the master budget compile the budgeted income statement All right, so let's go through the quick list once again of the components of the budget We have the sales budget. We need to do it in this order. We then have the production budget We then can create from the production budget, which was created from the sales budget that direct materials budget They direct labor budget the overhead budget as well as the capital expenditures for large Projects and equipment. We might be purchasing selling and administrative budget. We then created the cash budget the cash flow budget then we in between that in between Making our financial statements such as the balance sheet the income statement and the statement of cash flows We needed the cost of goods sold and therefore we had to create the cost of goods Manufactured the cost of goods manufactured and the cost of goods sold Calculations have been done in order to help us with the budgeted income statement in that case now We're going to move to the one of the major statements Of course one of the major statements that we think of when we think of the budget That's the income statement because we're usually thinking about how we're going to perform Over time and that's going to be income statement the timing of how we're doing So that's what we're going to move to at this point in time. So let's take a look at all the budgets We've seen so far We're going to be using some of these in order to create the budget income statement We started off with the sales budget. What are we going to make? We then use that to create the production budget How much stuff are we going to produce and then we use that to see how much? Materials we're going to need in step three and then in step four We needed to see how much direct labor we were going to need and then in step five We had the factory overhead then the selling and administrative and finally the general and administrative areas when then we did the budgeted cost of goods manufactured budget and we also did the cash flow budget was in there as well and Then the cost of goods sold those are going to be the major components We will then need going forward here to the budgeted income statement So now we are on the budgeted income statements and first piece will of course be