Cost of production budget (definition and explanation)

Cost of production budget (definition and explanation)

Cost of Production Budget After preparation of the production budget, this budget is prepared. Production cost budgets show the cost of the production determined in the production budget. Cost of the production budget is grouped in the material cost budget, labour cost budget and overhead cost budget. Because it breaks up the cost of each product into three main elements material, labour, and overheads. Overheads may be further subdivided into fixed, variable and semi-fixed overheads. Therefore, separate budgets required for each item.

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