This video shows how to prepare an Ending Inventory Budget.

Companies create an Ending Inventory Budget because they need to know the ending inventory balance for the budgeted Balance Sheet.

A manufacturing company calculates its ending inventory balance by computing the product cost per unit. This can be found using information from the Production Budget, the Direct Materials Budget, the Direct Labor Budget, and the Manufacturing Overhead Budget. The product cost per unit is then multiplied by the targeted ending inventory in units (this is from the Production Budget) to determine the ending inventory amount for the Balance Sheet.