COST ACCOUNTING
THE MASTER BUDGET
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Production requirements formula is:
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Budgeted sales units-Desired ending finished goods units-Beginning finished goods units = Required production units
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Budgeted sales units + Desired ending finished goods units-Beginning finished goods units = Required production units
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Budgeted sales units-Desired ending finished goods units + Beginning finished goods units = Required production units
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Budgeted sales units + Desired ending finished goods units + Beginning finished goods units = Required production units
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Explanation:
Detailed explanation-1: -Therefore, in simple equation form, production budget = The sales budget or forecast + Planned inventory to be maintained in the end – Inventory in the beginning.
Detailed explanation-2: -The production budget calculates the number of units of products that must be manufactured, and is derived from a combination of the sales forecast and the planned amount of finished goods inventory to have on hand (usually as safety stock to cover for unexpected increases in demand).
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