Company plans to sell 24000 units of R next year. Opening inventory of R is expected to be 2000 units and company plans to increase inventory by 25% by the end of the year. How many units of product R should be produced next year?
Answer is 24500 units.
However, I thought that Budgeted Production = Budgeted Sales + Closing Inventory – Opening Inventory. Therefore, my answer was 22500 because I subtracted 2000 units. How come Opening Inventory wasn’t subtracted here?