Question

The McKnight Company expects sales in 2015 of 56,000 units of serving trays. McKnight has beginning inventory for 2015 of 2,000 trays, and its target ending inventory is 4,500 trays. Compute the number of trays budgeted for production in 2015.

Answer 1

the formula to calculate budgeted production number or value of production budget is given by :Units produced = our projected sales + our desired ending inventory – our beginning inventory (how much we have on hand)

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). The production budget is typically prepared for a "push" manufacturing system, as is used in a material requirements planning environment

therefore to get the budget production in the year 2015:

the budgeted production value = $58,500