Question

Chapter 15 - Budgeting - Management Needs - DB #6 You are the only hired production manager for the XYZ Company manufacturing plant and have been asked by the VP of Manufacturing to provide a budget for the next quarter production-for-prime costs. What information will you need from accounting to assist in building this report? Please respond in a narrative format, minimum of 100 words, following APA format for any outside references that you use in support of your ideas/thoughts. For this DB, please respond to the thread from your instructor. Do not start a new DB thread; posts not posted as a reply to the instructor will not be graded

Answer 1

A budget is a a kind of tool for financial control which gives a detailed view of the possible scenario of expenses and revenue.It helps to understand the requirements in advance and keep a preparedness for the future.

The budget is required for the Prime costs .

Prime costs are costs which are directly related to the production of goods .

Prime costs = Direct material + Direct labour+ Direct expenses

The following are the key information points that need to be taken from the accounting department for preparing the budget for the next quarter with respect to the prime costs .

1. The units that are intended to be manufactured,keeping in view the past cost data .
2. The data of suppliers in order to get quotations .
3. Payroll data regarding payment of wages to direct labour.
4. Details of direct expenses that were incurred in the past.
5. Previous cost sheet to create a base for the budget.