From the course: Accounting Foundations: Budgeting
Unlock the full course today
Join today to access over 22,400 courses taught by industry experts or purchase this course individually.
Master budget exercise: The production budget
From the course: Accounting Foundations: Budgeting
Master budget exercise: The production budget
- After the sales budget is completed, the second detailed budget covers the number of units to be produced during the period. Now, there are three factors that need to be considered in preparing this production budget. First, the projected sales volume for the period. Second, the desired ending inventory. How much do you want on hand at the end? And, third, the amount of inventory already on hand in the beginning inventory. Now, ending inventory is an important figure because management wants enough units on hand to meet customer demands, but not so many that unnecessary costs will be incurred because of excessive inventory. So let's consider the question, why does a manufacturer want any inventory at all? Well, on the one side, what if we run out of finished goods? We'll have lost sales, perhaps now and forever. We'll also have lost reputation. But on the other hand, what if we have too many finished goods? Well, we'll have excess resources tied up in inventory. The inventory could…
Practice while you learn with exercise files
Download the files the instructor uses to teach the course. Follow along and learn by watching, listening and practicing.
Contents
-
-
-
-
Hong Kong and the typhoon border shutdown3m 15s
-
The master budget3m 10s
-
Master budget exercise: The sales budget2m 14s
-
Factors to consider in your sales budget2m 4s
-
Closer look at our sample sales budget4m 21s
-
Master budget exercise: The production budget3m 51s
-
Master budget exercise: The direct materials budget4m 12s
-
Tips on maintaining accounts payable on raw materials2m 3s
-
Master budget exercise: The direct labor budget3m
-
Master budget exercise: The manufacturing overhead budget3m 41s
-
The SG&A budget3m 46s
-
What a master budget can tell you about your business1m 55s
-
-
-
-
-