The Planned Budgeted Production formula depends on what information you have available and what you want to calculate.
Here are two common formulas:
1. Planned Production Units: This formula calculates the number of units a company needs to produce based on its projected sales and desired ending inventory.
Planned Production Units = Projected Sales + Desired Ending Inventory - Beginning Inventory
2. Planned Production Budget: This formula calculates the total cost of producing the planned units.
Planned Production Budget = Cost per Unit x Planned Production Units
Cost per Unit: The total cost of producing one unit, including direct materials, direct labor, and manufacturing overhead.
Planned Production Units: The number of units calculated in the first formula.
Explain the Planned Budgeted Production formula and how is is used.