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Question

What is the formula used to determine the number of units to be produced?

Step-by-Step Solution

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Answer

The production budget helps in preparing the production cost budget.

1Step 1: Meaning of Production Budget

The production budget is a budget that shows the number of units that need to be produced to fulfill the estimated sales.

2Step 2:Formula used to determine the number of units to be produced

$\begin{matrix} B u d g e t e d u n i t s t o b e p r o d u c e d = B u d g e t e d u n i t s t o b e s o l d + D e s i r e d u n i t s i n e n d i n g i n v e n t o r y \\ - u n i t s i n t h e b e g i n n i n g i n v e n t o r y \end{matrix}$

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Other exercises in this chapter

Q8RQ

In a manufacturing company, what are the three types of budgets included in the master budget? Describe each type.

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Q9RQ

Why is the sales budget considered the cornerstone of the master budget?

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Q11RQ

What is the formula used to determine the amount of direct materials to be purchased?

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Q12RQ

What are the two types of manufacturing overhead? How do they affect the manufacturing overhead budget calculations?

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