hamsta production budget
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Production Budget
(unit to be produced)
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Production Budget
• A firm prepares a production budget after determining the number of units that it expects
to sell (in sales budget)
• A production budget is a plan for acquiring theresources needed to carry out the manufacturing
operations to satisfy the expected sales and
maintain the desired ending inventory
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The Operating Budget
Sales Budget
Production Budget
Overhead Budget
Direct Labor Budget
Direct Materials Budgets*
Admin
Expense
Budget
Selling
Expense
Budget
*/ unit of direct materials used ,direct materials purchases, cost of direct materials
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• The production budget is a statement of the output by
product and is generally expressed in units
• Also called unit to be produced budget ; abudget that detailed about unit to be produced by
company in the future.
• Include:
– type / quality of unit
– quantity
– time
– etc
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Production Planning(production budget is just part of it)
• Plan of routing
(raw material to finished good)
• Plan of lay-out
• Plan of schedulling
• Plan of the organization of production
• Plan of product development
• etc
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The total number of units to be produced depends
on many factors, amongs them :
– the budgeted sales – company resources
– the desired units of finished goods ending
inventory
– the units of finished goods beginning inventory
– cost of storage and other policies
– production pattern
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Inventory Management
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Stability Production Pattern (1)
• Advantages :
– Full employment (minimize/zero social
problem, cost to recruit, etc)
– Machinery and all equiptment used
stable
– Good relation with vendors and financial
institution (in term of financing/credit)
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Stability Production Pattern (2)
• Disadvantages :
– Inventory cost (storage cost) increase
– Storaging risk increase (shrink of volume,
quality decrease, etc)
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Stability Production Pattern (3)
Keterangan January February March April
Sales 42.000 60.000 84.000 73.000Inventory
(beginning) 5.000 28.000 33.000 14.000
37.000 32.000 51.000 59.000
Produced 65.000 65.000 65.000 65.000
Inventory(ending)
28.000 33.000 14.000 6.000
ABC EnterpriseProduction Budget
First Quartal
(in unit)
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Production Budget
Budgeted sales in units
+ Desired ending inventory of finished goods= Total needs
- Beginning inventory of finished
goods= Units to be produced
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Stability Production Pattern (4)
Keterangan January February March April
Sales 42.000 60.000 84.000 73.000Inventory(ending)
28.000 33.000 14.000 6.000
70.000 93.000 98.000 79.000
Inventory
(beginning) 5.000 28.000 33.000 14.000
Produced 65.000 65.000 65.000 65.000
ABC EnterpriseProduction Budget
First Quartal
(in unit)
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Fluctuated Production Pattern as
Fluactuated Sales Pattern
Keterangan January February March April
Sales 42.000 60.000 84.000 73.000Inventory(ending)
10.000 10.000 10.000 10.000
52.000 70.000 94.000 83.000
Inventory
(beginning)
10.000 10.000 10.000 10.000
Produced 42.000 60.000 84.000 73.000
ABC EnterpriseProduction Budget
First Quartal
(in unit)
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Moderately Fluctuated Production Pattern
than Fluactuated Sales Pattern
Keterangan January February March April
Sales 42.000 60.000 84.000 73.000Inventory(ending)
11.000 17.000 5.000 4.000
53.000 77.000 94.000 77.000
Inventory
(beginning)
5.000 11.000 17.000 5.000
Produced 48.000 66.000 72.000 72.000
ABC EnterpriseProduction Budget
First Quartal
(in unit)
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Sales Budget
SaleForecast April May June Quarter
Sales in units 20,000 25,000 35,000 80,000
Selling price
per unit x $30 x $30 x $30 x $30
Total sales $600,000 $750,000 $1,050,000 $2,400,000
Kerry Industrial Products Company
Sales Budget
For the First Quarter Ended June 30, 2007
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Production Budget
Kerry expects to have 5,000 units on hand on April 1 andwants to have 30% of the following month’s projected unit
sales on hand at the end of each month.
Kerry expects to have 5,000 units on hand on April 1 andwants to have 30% of the following month’s projected unit
sales on hand at the end of each month.
Determining the budgeted units of production:
Budgeted Budgeted Desired Beginning
Production Sales Ending Inventory(in units) (in units) Inventory (in units)
(in units)
Determining the budgeted units of production:
Budgeted Budgeted Desired Beginning
Production Sales Ending Inventory(in units) (in units) Inventory (in units)
(in units)
= + –
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Production Budget
April May June Quarter Budgeted sales in units 20,000 25,000 35,000 80,000
Desired ending inventory 7,500 10,500
Units needed 27,500 35,500
Beginning inventory 5,000 7,500
Budgeted production 22,500 28,000
Kerry Industrial Products Company
Production Budget
For the Quarter Ended June30,2007
30% of June30% of June’’ss
budgeted salesbudgeted sales
30% of June30% of June’’ss
budgeted salesbudgeted sales
uly sales are budgeted at 40,000 units,
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