02-26-2009, 04:22 PM
Kamran Bhayee
Usually the sales is taken as "Principle Budget Factor" rather than plant capacity. Here the management accountants assume that the Expected Sale cannot be so abnormal and the expected sales can be produced keeping fixed overhead almost constant.
Furthermore to streamline budgeting process all budgets should be prepared in sequential manner. First sales budget in prepared and then the required production determined after taking in consideration the inventories of work in progress and finished goods and after which production budget is prepared.
Regards,
Awais
Usually the sales is taken as "Principle Budget Factor" rather than plant capacity. Here the management accountants assume that the Expected Sale cannot be so abnormal and the expected sales can be produced keeping fixed overhead almost constant.
Furthermore to streamline budgeting process all budgets should be prepared in sequential manner. First sales budget in prepared and then the required production determined after taking in consideration the inventories of work in progress and finished goods and after which production budget is prepared.
Regards,
Awais