Question

Budgeted production equals ________.*

A) beginning finished goods inventory + budgeted unit sales - targeted ending finished goods inventory
B) targeted ending finished goods inventory + beginning finished goods inventory - budgeted unit sales
C) budgeted unit sales + targeted ending finished goods inventory - beginning finished goods inventory
D) budgeted unit sales + targeted ending finished goods inventory + beginning finished goods inventory

Answer 1

Option (A), Budgeted production is calculated as beginning finished goods inventory plus budgeted unit sales minus targeted ending finished goods inventory.

Step-by-step explanation:

The correct answer to the question of what budgeted production equals is A) beginning finished goods inventory + budgeted unit sales - targeted ending finished goods inventory. This means that the total units that need to be produced for a specific period are the sum of the beginning inventory and the planned sales for that period, minus the inventory planned to be on hand at the end of the period.

This formula helps companies ensure that they produce enough goods to meet sales demand without ending up with excess inventory.