Question

If the expected sales volume for the current period is 8,000 units, the desired ending inventory is 1,400 units, and the beginning inventory is 1,200 units, the number of units set forth in the production budget, representing total production for the current period, is

Answer 1

Answer:

8,200 units

Explanation:

A production budget is estimate of the quantity of a product that a business is expected to manufacture to meets the budgeted level of sales volume and the desired level of inventory at the end of a particular accounting period.

To determine the production budget, budgeted sales volume is adjusted for opening and closing inventories using the formula below:

Budgeted sales + Closing inventory - Opening Inventory

= 8,000 + 1,400 - 1,200

= 8,200 units

Production budget = 8,200 units