If Division Inc.expects to sell 200,000 units in 2016, 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 2016 is 198,000 units.

Question

Quizplus · Accepted Answer

The budgeted volume of production for 2016 can be calculated using the following formula:

Budgeted Production = Expected Sales + Desired Ending Inventory - Beginning Inventory
Budgeted Production = 200,000 + 24,000 - 22,000
Budgeted Production = 202,000 units

Therefore, the statement is false. The budgeted volume of production for 2016 is 202,000 units, not 198,000 units.