If Division Inc. expects to sell 200,000 units in the current year, desires ending inventory of 24,000 units, and has 22,000 units on hand as of the beginning of the year, the budgeted volume of production for the year is 202,000 units.

Question

Quizplus · Accepted Answer

To meet the sales and desired ending inventory levels, Division Inc. needs to produce enough units to cover the sales and increase inventory to the desired level. This is calculated as follows: Sales (200,000 units) + Desired Ending Inventory (24,000 units) - Beginning Inventory (22,000 units) = 202,000 units needed for production.