Asked by TEHREEM AHMED on Jul 28, 2024

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Verified

In a production budget, if the number of units in finished goods inventory at the end of the period is less than the number of units in finished goods inventory at the beginning of the period, then the expected number of units sold is less than the number of units to be produced during the period.

Production Budget

An estimate of the number of units that must be produced in a given period to meet the sales and inventory needs, forming part of the master budget of a business.

Finished Goods Inventory

Products that have completed the manufacturing process but have not yet been sold or distributed to customers.

Expected Units Sold

The number of units of a product that a company anticipates selling in a particular period based on market research and sales forecasts.

  • Familiarize oneself with the constituents and planning required for a production budget.
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Verified Answer

DN
Donia NimehJul 30, 2024
Final Answer :
False
Explanation :
If the number of units in finished goods inventory at the end of the period is less than the number of units in finished goods inventory at the beginning of the period, it does not necessarily mean that the expected number of units sold is less than the number of units to be produced during the period. It could have been due to factors like increased demand or lower production. The production budget is only one part of the overall budget, and other factors like sales forecasts, marketing expenses, and overhead costs should also be considered to determine the expected number of units sold.