dasnoob.blogg.se

This may be done by establishing standard rates of turnover for the inventory as a whole or for different sections of the inventory. Here basic policies are adopted relative to the relationship that must be maintained between finished goods and sales. Where the sales of individual items fluctuate considerably and where such fluctuations must be watched for hundreds or even thousands of items, a second plan is preferable. The application is similar in principle to that illustrated in connection with raw materials controlled budget-wise by minimums and maximums.īudgeting Total Finished Quantities and Values It is particularly suitable for those concerns that manufacture a comparatively small number of items in large quantities. Where the sales and production plans can be enforced with reasonable certainty, this is the preferable method. Method-2: Sales and Production Plans can be enforced with reasonable certainty. If either varies to any important degree from the budget, the other must be revised to a compensating degree and the inventory budget revised accordingly. Under this plan, control over the inventory is effected by means of enforcement of the sales and production plans. If it fails in either respect, revision must be made in the plans of sales, production, or finance until a proper coordination is effected. This total budget can then be tested by the rate of turnover desired as proof that a satisfactory relationship will be maintained between inventory and sales and that it harmonizes with the general finance plan.

The total budget is merely the sum of the budgets of individual items. The detailed production or purchasing plan can then be developed to provide such quantities over and above current sales requirements. This is done by studying the past sales record and the sales program of each item and determining the quantity that should be on hand at various dates (usually, the close of each month) throughout the budget period. Method-1: A budget is established for each item separately. Two general methods may be employed in budgeting the finished goods inventory: Budgeting Finished Goods by Individual Items