Production budget/quantity calculation
Sales quantity to sell - opening inventory of finsihed good+ closing inventory = production quantity
IF THERES WASTE
production quantity + anticipated waste amount = production quantity
E.g. 20% wasted therefore you will divide the product quantity/80 then * 100
Material usage budget
Quantatiy of units * material + wasted material if any
Material purchase budget
Material usage ( calculated in card before) - opening inventory of material + closing inventory of material
- closing inventory may be a % of the next opening amount, question will state
Labour usage/hours budget
Quantity needed to meet production x ( labour hours + idle time)
Unethical behaviour arise from budget
Budgetary slack - manager overestimate costs and undermine sales so that they aren’t blamed in future for poor results and overspending therefore looks better
Spending full buedget
- unnecessary spending to ensure the full allowance is used and not overspent to ensure next year budget isn’t reduced which will make job harder
