ACC 220 Week 7 DQ 2 - 7383

Solution Posted by
3number
Solution Detail
Price: $2.00
  • From: ,
  • Posted on: Wed 11 Apr, 2012
  • Request id: None
  • Purchased: 0 time(s)
  • Average Rating: No rating
Request Description

 



There are several different types of budgets that a business normally uses. These are:
The Sales Budget: it is an estimate of the company's anticipated sales, both in terms of units and in Dollars.
The Production Budget: usually made after the sales budget, it estimates the number of units that must be produced in order to meet the planned sales patterns. Sub budgets under this heading also estimate the cost of material, labor and overheads required to produce budgeted units.
Cash budget: this budget estimates the cash inflows and outflows that are anticipated by the business. It helps the business identify those periods where a business's operations might not be enough to cover its expenditure and may have to seek loan financing.
The Marketing budget: it is a budget that estimates funds needed for the effective advertisement and promotion of the product
Master budget: it is a summary of all the other budgets brought together and made into one budget that describes the total business picture.

I shall now explain the production and its related budgets

If the principal limiting factor in the budgetary process was production, then the production budget would be made first. More commonly, when either sales is the principal budgetary factor or when the sales volume is constant, the production budget would be made after the sales budget is made and would be coordinated with that budget and the finished stock budget.

The production budget shows the quantities and cost for each product and product group and is scheduled to dovetail with the sales and inventory budgets. This coordination process is likely to show excess or shortfalls in capacity at various times over the budget period. Where shortfalls are anticipated, then the company may hire additional staff or think of increasing capacity. Where excesses are anticipated, then the company would consider product diversification.

When the production budget is being finalized, the production input budgets (material, labor and overhead) are developed based upon the budgeted activity levels, existing stock positions and projected material, labor and service costs. Where standardized goods and services are produced then the production input budgets can be developed with ease, but in jobbing type industries the process is less precise.

One of my classmates has described the materials requirements budget. The production budget relates to this because the materials requirement budget cannot be made until the production budget has been drafted. This is because one has to know the exact number of finished goods to be produced before figuring out how much material would be used on them.

 

Solution Description



There are several different types of budgets that a business normally uses. These are:
The Sales Budget: it is an estimate of the company's anticipated sales, both in terms of units and in Dollars.
The Production Budget: usually made after the sales budget, it estimates the number of units that must be produced in order to meet the planned sales patterns. Sub budgets under this heading also estimate the cost of material, labor and overheads required to produce budgeted units.