Which of the following equations best depicts a basic production budget?
A) Required Production = Projected Sales - Desired Ending Inventory + Beginning Inventory
B) Required Production = Projected Sales + Desired Ending Inventory - Beginning Inventory
C) Required Production = Projected Sales -Desired Ending Inventory - Beginning Inventory
D) Required Production = Projected Sales + Desired Ending Inventory + Beginning Inventory

Question

Quizplus · Accepted Answer

The equation for a basic production budget should take into account projected sales and the desired ending inventory, as well as the beginning inventory. Option B includes all three of these components in the correct order, so it is the best choice. Option A incorrectly subtracts the beginning inventory from the required production, while option C incorrectly subtracts both the desired ending inventory and the beginning inventory from projected sales. Option D includes all three components but fails to subtract the beginning inventory from the required production.

Which of the Following Equations Best Depicts a Basic Production