The data from the budgets prepared earlier are combined to prepare the budgeted income statement. This budget helps to determine whether the profits stated in the other budgets are realizable.

The cost of goods sold is calculated based on information from the direct materials, direct labor, and factory overhead budgets. In the case of the sales budget, this is used to generate a figure for estimated revenue.

Within a company, the budget director can include information from the selling expense and general/administrative expense budget to prepare the budgeted income statement.

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