Answered

Although only 20 units are on hand at the beginning of the year, World Company plans to sell 100 units during 2014. Assuming the company desires an ending inventory of 10 units, it should plan to purchase 110 units.

Question 5 options:

1) True

2) False

Answer :

Answer:

The correct answer is number "2": False.

Explanation:

According to the case:

  • Units on hand: 20
  • Units planned for sale: 100
  • Units desired as pending inventory: 10
  • Units planned for purchase: x

Thus,

Total inventory = Units planned for sale + Units desired as pending inventory

Total inventory = 100 + 10

Total inventory = 110 units

So,

Units planned for purchase = Total inventory - Units on hand

Units planned for purchase = 110 - 20

Units planned for purchase = 90 units

The company should plan to purchase 90 units.

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