The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory.

A. True. B. False.

False

Explanation:

In forecasting for the number of goods to be manufactured, the easy way out is adding budgeted sales to opening stock in inventory and then deducting the inventory figure at the close of the period.

Determining the production quantity is similar to calculating costs of good sold as opening inventory is added to purchases whereas the closing inventory is deducted.

In other words, the opening inventory should be added not taken out and the closing inventory should be subtracted.

A. True

Explanation:

The movement/change in the balance of inventories at the start and end of a period is due to sales and production. This can be expressed mathematically as

Opening balance + items produced - item sold = closing balance

As such,

items produced = closing balance + items sold - opening balance

Hence, the number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory.

True