Definition Definition

Production budget

Production budget is a projection of the units that must be produced to meet anticipated sales.

Production requirements are determined form the following formula.

(Budgeted Sales Units + Desired Ending Finished Goods Units – Beginning Finished Goods Units) = Required Production Units

A realistic estimate of ending inventory is essential in scheduling production requirements. Excessive inventories in one quarter may lead to cutbacks in production and employee layoffs in as subsequent quarter.

Share it: CITE

Related Definitions