Sleepgood Company's Production Budget Calculation

Production Budget Calculation Explanation

Sleepgood Company produces and sells pillows. Based on the given data, the company expects to sell 10,000 pillows in the next month. Additionally, they will have 1,000 pillows in finished goods inventory at the end of the current month, and would like to complete operations next month with at least 1,000 completed pillows in inventory.

The production budget for the next month can be calculated by summing up the sales budget with the closing inventory and subtracting the opening inventory. Since there is no ending work-in-process inventory mentioned, we consider the opening inventory for the next month to be the same as the closing inventory for the current month, which is 1,000 units.

Therefore, the production budget for the next month is:

Production budget = Sales budget + closing inventory - opening inventory

Production budget = 10,000 + 1,000 - 1,000

Production budget = 10,000 units

Therefore, based on the given data and calculations, Sleepgood Company would produce 10,000 pillows in the next month.