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Forecasted Sales + ending inventory (planned) - opening inventory current in hand
Contrary to typical budgets that are calculated in montetary terms, production budgets are calculated in units. The purpose of a production budget is to calculate the the number of units to be manufactured. The production units to be manufactured is determined by subtracting the beginning finished goods inventory from the sum of projected sales and the planned ending inventory.
Production Budget = Forcasted Unit Sales + Planned Ending Inventory (in Units) - Beginning Inventory (in Units)
