Question

A well-planned production programme is required to ensure sufficient stock for sales, to keep inventory within reasonable limits and to manufacture goods in the most economical manner. Justify this statement.

Answer 1

1. The production budget includes a projection of the final product’s closing inventory as well as an estimate of the overall production volume, broken down by product, week, or month. Typically, the sales budget serves as the foundation for the production budget.
2. However, product budget is based on past performance when it is impossible to predict sales due to rapid changes in style and styles.
3. The creation and implementation of the production budget are under the purview of the works manager.
4. Financial or quantitative units, or both, may be used to indicate the production budget.
5. Sales requirements, inventory policy, and balanced production for a well-planned production program are all taken into account while creating the production budget.