Inventory Management – Short Answer

Practice Question

Intro to Managerial Accounting
Inventory Management
Short Answer

A company wants to maintain an ending inventory of 20% of the next quarter’s budgeted sales volume. If the budgeted sales volume for the next quarter is 50,000 units, what should the ending inventory be for the current quarter?

Answer +
Correct Answer: 10,000 units
Explanation +

Step 1: Identify the target ending inventory percentage and future sales volume.

Step 2: Ending Inventory = 20% × 50,000 = 10,000 units.

Conclusion: The ending inventory for the current quarter should be 10,000 units.