The number of units in the sales budget and the production budget may differ because of a change in ________.

Question

Quizplus · Accepted Answer

The number of units in the sales budget and the production budget may differ because of a change in finished goods inventory levels. If the finished goods inventory levels are high, the company may need to decrease production to avoid overstocking, even if the sales forecasts indicate higher demand. On the other hand, if finished goods inventory levels are low, the company may need to increase production to satisfy demand, even if the sales forecast indicates lower demand. Therefore, changes in finished goods inventory levels can cause a difference between the sales budget and the production budget.

The Number of Units in the Sales Budget and the Production