In the operation of every company always needed a systematic step to be able to empower the potential of its resources efficiently and effectively. To achieve these conditions required careful planning of management and pursue operational steps to be performed. The degree of complexity of the plan is certainly influenced by the scale of the company, large companies require relatively more formal and detailed planning.
A budget is an organized and comprehensive plan, expressed in monetary units for the operation and resources of an enterprise over a specified period in the future.
According to Nafarin (2000: 9) suggests that: "A budget is a written plan on the activity of an organization which is stated quantitatively and is generally expressed in units of money for a certain period of time."
In a trading company that produces its own merchandise it is necessary to have a production process. In the production process certainly can not be done in vain. To get maximum results and satisfy the consumer then the company must manage the production process from the beginning to the final stage so as to get a product that works for prospective customers. Companies must know in advance the steps or arrangements to be made in the production process.
A. production
Production Management is as a continuous and effective process using the management function to integrate with various resources efficiently in order to achieve the goal (Fogarty, 1989)
According to Hani Handoko MBA (1993, 3) Production management is an effort to optimally manage the use of resources (or often called factors of production) of labor, machinery, equipment, raw materials etc., in the process of transforming raw materials and labor into various productions and services.
Production Management is one of the areas of management that is important for the survival of the company. When the quality of a product or service becomes key in winning business competition, the role of production management is increasingly important for the company. Poor production activity can lead to waste in the form of stockpiling. Poor production activity can also result in poor quality of products or services produced. Many examples of companies fail to compete in the market because of weak management of production. On the other hand, there are also companies that managed to win the competition for managing their production activities well.
When designing production systems, management should consider product design, production volume, production process, location and layout, and work plan.
Depending on the product being produced, the company will use one of the following production methods:
Sustainable processing makes the same product through a continuous set of standard procedures.
Batch processing produces different groups (batches).
Order-based processing involves making different products according to customer specifications.
A. Production Cost
Production costs are those costs that are directly related to the production of a product and will be reconciled with the revenue in the period in which the product is sold. Prior to sale, production costs are treated as inventories. This fee consists of; cost of raw materials, direct labor costs and factory overhead costs.
The cost of production determines the basic price attached to the product produced by the company. As long as a product remains unsold, the charge will be delayed for a certain period and required as an inventory in the form of inventory.
Ahmad (2007: 34) suggests that: "The cost of production is the cost incurred to produce an item". Production costs represent costs associated with the manufacture of goods and the provision of services. Production costs can be further classified as direct material costs. Direct labor and factory overhead. While non-production costs are related costs in addition to production functions namely, development, distribution, customer service and general administration.
Types of Production Costs in a company
Raw material costs
Direct labor costs
Factory overhead costs. "
C. Corporate Profit
Profit is one of the most important components in running a company's wheels. Profit is the difference between income and expenses incurred. To obtain maximum profit required good management of a number of costs incurred by the company. The amount of operational costs is one factor that affects the company's earnings.