What is the product life cycle?
Introduction → Growth → Maturity → Decline
What could limit sales demand?
Production capacity
Availability of labour
Availability of raw materials
Market share
Financial constraint
What is the sales budget?
It shows the expected revenue from sales based on budgeted units x selling price
What is the production budget?
Shows the number of units to produce to meet sales demand and maintain desire stock levels.
What is the direct costs budget?
Includes cost per unit of material x production units to get total material costs.
For labour = labour hours per unit x rate per hour
For variable costs multiple by unit
What is an overhead budget?
Fixed overheads are allocated to departments based on cost drivers
Variable overheads are multiple per unit or per labour hour by expected production.
What is the total production cost / master budget?
Direct costs + overheads = total production costs
What is a flexible budget?
These are adjusted budgeted costs for ACTUAL activity levels
What is variance analysis?
- Compared actual results vs flexed budget
- Favourable or adverse?
- Explain sales volume/ price, material efficiency rate
