Lecture 4
FUNCTIONAL BUDGET
A functional budget is one, which relate to a function of the business. All the functional budgets are summarized into what is known as a “master budget” . there functional budgets are subsidiary bright of the master budget. Functional budgets include
1.Sales budget
2.Production budget
3.Purcha of materials
4.Production cost budget
5.Plant utilization budget
6.Capital expenditure budget
7.Selling and distribution cost budget
8.Cash budget etc
SALES BUDGET
In manufacturing organizations sales budgeting begin with the forecasting of the sales of individual products. The forecasts may be by geographical areas, by class of customer by salesman by some other gment. The sales manager will be responsible for the preparation of the sale budgets, which are prepared in terms of quantities, then evaluated at budgeted unit prices sales budget is not only the most difficult to prepare. Factors to be considered while preparing sales budget are:
(i)Historical analysis of sales
(ii)Business condition
(iii)Reports by salesmen
(iv)Market analysis
(v)Other special condition
PRODUCTION BUDGET
计划打算
This is an estimate of production for the budget period. It is prepared by the production manager and it shows quantity of products to be manufactured. It is the initial step in
budgeting manufacturing operations. The production budget allows for a normal loss in production, so that net output will be sufficient to meet sales’ requirements and forecast stocks. It will be sub- divided into months so that production can be arranged over the year to meet possible asonal demands, holiday periods, etc
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There are at least three principal budgets related to production budget the are:
i.Raw materials budget – Direct materials budget
ii.Direct labour budget
iii.Production overhead budget
Factor to consider while preparing production budget are the following formula is ud for calculation of unit to be produced production = sales + closing stocks
怎么在网上卖东西i.Factory capacity
电脑太卡
ii.Budgeted stock requirement
iii.Sales budget
Illustration
The following information has been made available from the records of Oluwatobi Nig. Ltd for the six months of 2006 (and of only the sales of January 2007) in respect of production X
(1) The unit to be sold in different months are
July 2006 1,100
August 2006 1, 100
September 2006 1,700
October 2006 1,900
November 2006 2,300
December 2006 2,300
January 2007 2,000
(2) There will be no work in progress at the end of any month
(3) Finishing units which are equal to half the sales of the next month will be in stock
at the end of every month (including June, 2006
(4) Budgeting production and production cost for the year ending 31st2006, are as
follows:
Production (Unit) 22,100
岗位工作说明书Direct materials per unit N 10
Direct wages per unit N4
Total factory overhead apportioned to production N 88,000 you are required: to prepare:
(a) A production budget for each or the six months of 2000 and
(b) A summarized production cost budget for the same period
PURCHASE BUDGET
The purcha manager is responsible for preparing a detailed plan of purchars for the budget period and for submitting the plan in the form of a purcha budget. It indicates: (i) The quantities of each type of raw materials and other items to be purchad
(ii)The timing of purcha
(iii)The estimated cost of material purchad material purcha will be material required for production plus choosing raw materials less opening raw
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material
Illustration
The sales manger of Igbala Nig. Ltd reports that next year he expects to ll 100,000 units of a certain production. The production manager consults the sore keeper and cost his figure as follows:
Two kinds of raw materials A and B are require for manufacturing the production each unit of the production requires 2 units of A and 3 units of B. The estimated opening balance at the commencement of the next year are – finished production 20,000 units, A – 24,000 and B – 30,000 units the desirable closing balance at the end of the next year are finished product – next – 28,000 units
A – 26,000 units and
B – 32,00 units
Your are required to draw up a quantitative chart to show the materials purcha budgets for the next year
PRODUCTION COST BUDGET
This is the quantity of product to be manufactured expresd in terms of cost. The following budgets are summarized to give the production cost budget
1.Labour budget
2.Raw materials
3.Production overheads budget
LABOUR BUDGET
It specifies the direct labour requirement of various products as envisage in the production budget. It reprents the forecast of labour requirement to meet the demands of the company during the budget period. The direct labour budget will be developed for both direct labour hours and direct labour cost. After the labour requirement rerlating to different grades are finalized, estimated rate per hour and labour cost per unit is arrived it.
RAW MATERIALS BUDGET
The budget shows the estimated quantities of all the raw materials and components needed for the output demanded by the production. The materials budget provides basis for of control over materials usage and purcha cost budget. The following formula can be ud
可贵的反义词
Purcha = Closing stock + Usage – Opening Stock
The raw materials budget rves the following purpos
i.It assist the purchasing department in planning the purchars
ii.It helps in the preparation of purcha budget
iii.It provides data for raw materials control
NB = Indirect materials are included in the overhead cost budget
Lecture 5
PRODUCTION OVERHEAD BUDGET
This reprents the forecast of all the production overheads to be incurred during the budget period
ILLUSTRATION
Treasure limited makes 3 products. Extract from the standard cost records relating to the are as follow:
Materials Unit cost Unit of production Materials in final
production Production product z
A 1.10 5 A -
B 1.00 3 2 6
C 0.70 - 3 5
D 1.20 - 1 4
E 1.60 1 1 1
Although no los occur in the u of materials A to D, the standard yield on materials it is only 980% moreover, this is an ideal standard, the expected yield is 80%. During the month oif February the following sales figures were budgeted:
SALES
Product (units)
X 24,000
Y 30,000
Z 20,000
It is reckoned that 5% of the production of product Y will not pass the rigid quality control test recently instituted by the company and will thus be dispod off immediately.
Stocks on hand at the beginning of February are protected to be.
Finished Goods Units
X 3,600
Y 4,000叶圣陶代表作
Z 3,200
