How Do You Calculate Beginning Inventory In Production Budget?
Beginning inventory in a production budget is calculated by adding the balance of the inventory at the beginning of the period to the total production planned for the period and then subtracting the expected sales for the period. The formula for calculating beginning inventory is: Beginning inventory = (Beginning balance + Planned production) – Expected sales. This calculation helps in determining the quantity of inventory needed to meet customer demand and ensures that there is enough inventory available for sale throughout the period.