THE COSTS
PRODUCTION BUDGET

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       The production budget should be carefully coordinated with the sales budget to ensure that production and sales are kept in balance during the period. The number of units to be manufactured to meet budgeted sales and inventory requirements for each product is established in the production budget. The budgeted volume of production is determined as follows:

                         Expected units to sell
                      + Desired unit is ending inventory
                       - Estimated units in beggining inventory
                         Total units to be produced

       The following table shows the production budget for the company Colt Manufacturing, Inc.

    Colt Manufacturing, Inc.
    Production Budget
    For the Year Ending December 31, 2008

    UNITS

    Wallets
    Handbags
    Sales (Sales budget)
    528,000
    280,000
    Plus desired ending inventory, December 31, 2008
    80,000
    60,000
      Total
    608,000
    340,000
    Less estimated beggining inventory, January 1, 2008
    88,000
    48,000
    Total Production
    520,000
    292,000


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