Use the Following Information Regarding Black Company and Red Company

question 117

Multiple Choice

Use the following information regarding Black Company and Red Company to answer the question "Which amount is equal to Red Company's "days in inventory" for 2016 (to the closest decimal place) ?" $$\begin{array}{l}\begin{array} { | l | c | c | c | } \hline & \text { Year } & \begin{array} { c } \text { Inventory } \\\text { Turnover }\end{array} & \text { Ending Inventory } \\\hline \text { Black Company } & 2015 & & \$ 26,340 \\\hline & 2016 & 8.7 & \$ 29,890 \\\hline & 2017 & 8.4 & \$ 30,100 \\\hline\\\hline \text { Red Company } & 2015 & & \$ 25,860 \\\hline & 2016 & 7.0 & \$ 24,750 \\\hline & 2017 & 7.5 & \$ 22,530 \\\hline\end{array}\end{array}$$

• A)43.5 days
• B)48.7 days
• C)42.0 days
• D)52.1 days

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Definitions:

Overallocated

A situation in which resources, rights, or goods are distributed in excess of the optimal or desired level, often leading to inefficiency or scarcity in other areas.

Creative Destruction

A process whereby old, outdated industries and technologies are destroyed and replaced by new, innovative ones, driving economic growth.

Minimum AVC

The lowest point on the average variable cost curve, indicating the most efficient scale of production for minimizing variable costs per unit of output.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, perfect information, and easy market entry and exit, ensuring no individual firm can influence the market price.