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What factors are used to calculate the production budget? Complete the equation: Budgeting production=_+_-_

Budgeting Financial Reporting Financial Accounting Financial Analysis Management
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Question added by Anayatullah Tahir , Finance Manager , Etqan Projects
Date Posted: 2014/03/23
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Muhammad Zubair
by Muhammad Zubair , CFO / Chief Accountant , RH Group

Forecasted Sales + ending inventory (planned)  - opening inventory current in hand

Jessica Fisher
by Jessica Fisher , Executive Team Leader , Softlines

Contrary to typical budgets that are calculated in montetary terms, production budgets are calculated in units.  The purpose of a production budget is to calculate the the number of units to be manufactured.  The production units to be manufactured is determined by subtracting the beginning finished goods inventory from the sum of projected sales and the planned ending inventory.

 

Production Budget  =  Forcasted Unit Sales  +  Planned Ending Inventory (in Units)  -  Beginning Inventory (in Units)

 

 

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