Production Budget FitHealth Inc. produces a small and large version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows: Bath Scale Gym Scale East Region unit sales 20,000 35,800 West Region unit sales 21,600 22,700 Total 41,600 58,500 The finished goods inventory estimated for October 1 for the Bath and Gym scale models is 1,100 and 2,000 units, respectively. The desired finished goods inventory for October 31 for the Bath and Gym scale models is 800 and 2,200 units, respectively. Prepare a production budget for the Bath and Gym scales for the month ended October 31. FitHealth Inc.Production BudgetFor the Month Ending October 31 Units Bath Scale Units Gym Scale Expected units to be sold Plus desired inventory, October 31 Total units required Less estimated inventory, October 1 Total units to be produced
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Production Budget
FitHealth Inc. produces a small and large version of its popular electronic scale. The anticipated unit sales for the scales by sales region are as follows:
| Bath Scale | Gym Scale | |||
| East Region unit sales | 20,000 | 35,800 | ||
| West Region unit sales | 21,600 | 22,700 | ||
| Total | 41,600 | 58,500 |
The finished goods inventory estimated for October 1 for the Bath and Gym scale models is 1,100 and 2,000 units, respectively. The desired finished goods inventory for October 31 for the Bath and Gym scale models is 800 and 2,200 units, respectively.
Prepare a production budget for the Bath and Gym scales for the month ended October 31.
FitHealth Inc.Production BudgetFor the Month Ending October 31
| Units Bath Scale |
Units Gym Scale |
|
| Expected units to be sold | ||
|
Plus desired inventory, October 31
|
||
| Total units required | ||
|
Less estimated inventory, October 1
|
||
| Total units to be produced |
Solution
Production budget is a budget that determine the quantity of the firm's product that needs to be produced during a budgetary time period.
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