Sales Budget Production Budget

May 19th, 2015
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Louisiana State University - Eunice
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The Production Budget is a forecast of the production for the budget period. It provides an estimate of the total volume of production product-wise with the scheduling of operations by days, weeks and month and also a forecast of the closing finished product inventory.

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3.6.2 Sales BudgetThe sales budget is usually the keystone in planning and control of operation of a business. Sales forecast serves as a base for the sales budget. The sales budget is prepared in quantitative terms of units expected to be sold and the value expected to be realised. The Sales Manager should be made directly responsible for the preparation and execution of sales budget. This is prepared according to the requirements of the business while preparing sales budget. The useful classification may be-products, territories, customers, salesmen, etc. More than one classification may be employed. However, at the time of preparing sales budget the following factors should be kept in mind:(a) salesmens estimates (b) orders in hand (c) Past behaviour (d) Management policies for future (e) seasonal fluctuations (f) availability of materials (g) plant capacity (h) availability of finance (i) potential market (j) level of competition (k) position of competitors, etc. Look at the following illustration how a sales budget is to be prepared.3.6.3 Production BudgetThe Production Budget is a forecast of the production for the budget period. It provides an estimate of the total volume of production product-wise with the scheduling of operations by days, weeks and month and also a forecast of the closing finished product inventory. It is based on sales budget. The Factory Manager is the person generally made responsible for its preparation, administration and execution

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