# Cost and Management Accounting

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Cost & Management Accounting (MGT-402)
VU
Division
Mar
Jan
Feb
Product
Qty.
Price
Value
Qty.
Pr
Value
Qty.
Pric
Value
(Units)
(Rs.
(Rs.)
(Units)
ice
(Rs.)
(Units)
e
(Rs.)
)
(Rs.)
(Rs.
)
Town A
54,000
16
8,64,000
50,000
16
8,00,000
62,500
16
10,00,00
X
0
37,500
16
3,75,000
35,000
10
3,50,000
37,500
10
3,75,000
Y
Total
91,500
----
12,2,9000
85,000
----
11,50,000
----
13,75,00
0
Banglore
12,500
10
2,00,000
----
-----
16
X Town B
61,500
10
6,15,000
55,000
10
5,50,000
62,500
10
6,25,000
Y
Total
74,500
---
8,15,000
55,000
5,50,000
62,500
----
6,25,000
80,000
16
12,80,000
75,000
16
12,00,000
77,500
16
12,40,00
IX
0
II Y
9,000
10
90,000
----
----
10
Total
89,000
----
13,80,000
75,000
12,00,000
----
12,40,00
0
Product
1,46,500
16
23,44,000 1,25,000
16
20,00,000
1,40,00
16
22,40,00
X
1,08,500
10
10,80,000  90,000
10
9,00,000
0
10
0
Product II
1,00,00
10,00,00
Y
0
0
Total
2,54,500
----
34,24,000 2,15,000
29,00,000
2,40,00
----
32,40,00
0
0
Production budget
This budget provides an estimate of the total volume of production distributed product-wise with
the scheduling of operations by days, weeks and months and a forecast of the inventory of finished
products. Generally, the production budget is based on the sales -budget. The responsibility for the
overall production budget lies with Works Manager and that of departmental production budgets
with departmental works management Production budget may be expressed in physical or financial
terms or both in relation to production. The production budgets attempt to answer questions like:
(i)
What is to be produced?
(ii)
When it is to be produced?
(iii)
How it is to be produced?
(iv)
Where it is to be produced?
The production budget envisages the production program for achieving the sales target it serves as
a basis Job preparation of related cost- budgets, e.g., materials cost budget, labor cost budget, etc.
It easily facilities the preparation of a cash budget. The production budget is prepared after taking
into consideration several factors like: (i) Inventory policies. (II) Sales requirements, (iii)
Production stability, (iv) Plant capacity, (v) Availability of materials and labor, (vi) Time taken in
production process, etc.
207
Cost & Management Accounting (MGT-402)
VU
Activity 2
From the following details of Mysore Cement Works Limited, complete the production budget for
the three-month period ending March 31, 19x6 (Production budget for product P has already been
worked out.
Estimated stock
Estimated sale during
Desired closing stock
Type of product
on Jan 1, 19x6
Jan-March 1986
on March 31, 19x6
(Units)
(Units)
(Units)
1,000
5,000
1,500
P
Q
1,500
7,500
2,500
R
2,000
6,500
1,500
S
1,500
6,000
1,000
208