ECONOMICS

Detailed explanation-1: -The production budget is a quantity budget. It determines the number of units of a firm’s product that should be produced to meet the demand of the firm’s customers based on the sales forecast and sales budget.

Detailed explanation-2: -The production budget is designed by the management to estimate the number of products to be manufactured. It is designed based on the sales forecast and the budgeted amount of finished inventory.

Detailed explanation-3: -Production Cost Budget: Production cost budget is prepared to show the cost of production for the units of budgeted production. It is also known as manufacturing cost or work cost budget and includes cost of material, cost of labour, cost of direct expenses and factory overheads.

Detailed explanation-4: -A production budget is a calculation of the number of units of one or more products that a company needs to manufacture within a set period.