THE PRODUCTION BUDGET
The production budget represents the resources that will be produced to deliver the products and services. The production budget varies depending on the type of business. For companies that manufacture products, the production budget is the cost of the products produced, for trading companies, the production budget is the cost of the goods to be sold while for service companies, the production budget is the cost services. Ultimately, it corresponds to activities that are not sales and administrative activities, but rather activities directly related to the production of products and services.
manufacturing companies
Production budget
The production budget represents the number of units that will need to be produced in order to have the goods available to meet sales requirements. Production requirements are determined by the following calculation:
Expected sales in units
Plus: Inventories of finished products desired at the end
Total Requirements
Minus: Inventory of finished goods at the beginning
Production required
Commercial enterprises
Goods purchase budget
The production budget represents the number of units of goods available to meet sales requirements. Production requirements are determined by the following calculation:
Expected sales in units
Plus: Inventories of desired goods at the end
Total Requirements
Less: Stock of Goods at Start
Purchases required
Service companies
Service cost budget
The production budget represents the available hours of labor and the overhead of the cost of services to meet sales requirements. Production requirements are determined by the following calculation:
Expected sales
Direct Labor Cost
Indirect Labor Cost
Service production costs
Services required
EXAMPLE
EXCEL APP
SAGBOX Online 365
Budget and financial forecasts
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