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A Production Budget Example

Learn more about a production budget.

The Production Budget

The production budget must be adequate to meet budgeted sales and to provide for the desired ending inventory.

  • The management at Royal Company wants ending inventory to be equal to 20% of the following month’s budgeted sales in units.
  • On March 31st, 4,000 units were on hand.

Preparing the production budget….

Note: If Royal was a merchandising company it would prepare a merchandise purchase budget instead of a production budget.


Over to you

Take a look and the example and make sure you understand how to create the Production Budget.


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