Methods of Production (budgeting)

Question 1

Where is budgeting used in?

Answer 1

• operations
• Marketing

Question 2

What is sales budgets?

Answer 2

Sales budgets are firstly produced by the marketing department.
- Provide targets for sales staff to aim for.
- Be used in conjunction with bonuses or commission for meeting targets.
- Motivate sales staff to reach targets.

Question 3

What are production budgets?

Answer 3

Production budgets are created by using information from the sales budget.
- Plan production so that there are enough goods to meet anticipated sales.
- Allows enough raw materials to be purchased so there is no understocking.
- Allow for not too many raw materials to be purchases so there is no overstocking.