What are the different types of budgets normally prepared in a manufacturing business?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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This would depend to some extent on the size of the manufacturing business in questions.  However, here are some typical budgets that such a firm would use:

  • Marketing budgets, both monthly and annual
  • Production budget.  This would set out how much will be needed in the way raw materials and labor.  It will also predict the level of output for the period.  Finally, it will account for the overhead/fixed costs associated with the production process.
  • Administrative budget -- how much will be spent on and by the managerial team.

The previous budgets would be taken and used to create a master budget.  This master budget would also include:

  • Capital expenditure budget -- to plan for buying capital goods needed for production.
  • Cash budget -- to ensure the ability to pay bills and keep a good credit rating.

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