In the production budget, the total units to be produced is computed as

Question

Quizplus · Accepted Answer

The total units to be produced equals the expected sales plus the desired ending inventory minus the beginning inventory. This is because the desired ending inventory represents the amount of units that the company wants to have on hand at the end of the budget period, and the beginning inventory represents the units that are already in stock at the start of the budget period. Therefore, the total units to be produced needs to consider both the expected sales and the desired inventory levels.

In the Production Budget, the Total Units to Be Produced