Amounts of labor and overhead expected
to be consumed are based on the production budget.
These amounts are also used to
forecast staffing levels.
Overhead estimates tie back to
estimated capital budgeting expenditures for capacity.
Costs may be broken out into fixed and
variable components.
If activity-based costing is used for
budgeting purposes, levels of activities are forecasted based on anticipated
production, and overhead is estimated for each activity.
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