Production Budget of Finished Goods
This means how many units we need to Produce
Production = Sales + Closing Inv (units) - Opening Inv (units)
Syllabus C3c
Functional Budgets 6 / 26
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Production Budget of Finished Goods
This means how many units we need to Produce
Production = Sales + Closing Inv (units) - Opening Inv (units)
Page 1
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Example - Production
Sales = 1,000 units
OP Inventory 200 units
CL Inventory 100 units
Calculate the Production of finished goods.
Production = Sales + CL - OP
Production = 1,000 + 100 - 200
Production = 900 units
Next
Example - Production
Sales = 1,000 units
OP Inventory 200 units
CL Inventory 100 units
Calculate the Production of finished goods.
Production = Sales + CL - OP
Production = 1,000 + 100 - 200
Production = 900 units
Page 2
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Materials Usage
Means how many kg or litres of materials we need for our production
= Production (units) x Quantity (kg or l) required to produce 1 unit
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Materials Usage
Means how many kg or litres of materials we need for our production
= Production (units) x Quantity (kg or l) required to produce 1 unit
Page 3
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Example - Raw materials usage
Production = 1,000 units
Raw material requirement 5kg per unit
Calculate Raw materials usage in kg.
= Production x Quantity (kg)
= 1,000 units x 5kg/unit
= 5,000 kg
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Example - Raw materials usage
Production = 1,000 units
Raw material requirement 5kg per unit
Calculate Raw materials usage in kg.
= Production x Quantity (kg)
= 1,000 units x 5kg/unit
= 5,000 kg
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Materials Purchase
Means how much materials in kg or litres we need to purchase
= (Materials usage + CL raw materials - OP raw materials) x Cost per kg or litre
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Materials Purchase
Means how much materials in kg or litres we need to purchase
= (Materials usage + CL raw materials - OP raw materials) x Cost per kg or litre
Page 5
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Example - Raw materials (RM) purchases in kg
Production = 1,000 units
RM requirement 5kg per unit
Opening RM 200kg
Closing RM 100kg
Calculate Raw materials purchases in kg.
Material usage = 1,000 x 5 = 5,000kg
Purchases = Material usage + CL - OP
Purchases in kg = 5,000 + 100 - 200 = 4,900kg
Next
Example - Raw materials (RM) purchases in kg
Production = 1,000 units
RM requirement 5kg per unit
Opening RM 200kg
Closing RM 100kg
Calculate Raw materials purchases in kg.
Material usage = 1,000 x 5 = 5,000kg
Purchases = Material usage + CL - OP
Purchases in kg = 5,000 + 100 - 200 = 4,900kg
Page 6
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Example - Raw materials (RM) purchases in $
Production = 1,000 units
RM requirement 5kg per unit ($2/kg)
Opening RM 200kg
Closing RM 100kg
Calculate Raw materials purchases in $.
Material usage = 1,000 x 5 = 5,000kg
Purchases = Material usage + CL - OP
Purchases in kg = 5,000 + 100 - 200 = 4,900kg
Purchases in $ = 4,900kg x $2/kg = $9,800
Next
Example - Raw materials (RM) purchases in $
Production = 1,000 units
RM requirement 5kg per unit ($2/kg)
Opening RM 200kg
Closing RM 100kg
Calculate Raw materials purchases in $.
Material usage = 1,000 x 5 = 5,000kg
Purchases = Material usage + CL - OP
Purchases in kg = 5,000 + 100 - 200 = 4,900kg
Purchases in $ = 4,900kg x $2/kg = $9,800
Page 7