If Sales Totaled $200,000 for the Current Year (10,000 Units

question 108

Multiple Choice

If sales totaled $200,000 for the current year (10,000 units at $20 each) and planned sales totaled $212,500 (12,500 units at $17 each) ,the effect of the unit price factor on the change in sales is a:

• A) $30,000 increase
• B) $12,500 increase
• C) $7,500 increase
• D) $30,000 decrease

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Definitions:

Safety Stock

Extra inventory held to guard against uncertainty in demand or supply, minimizing the risk of stockouts.

Projected On-Hand Inventory

An estimate of the amount of stock that will be physically available in inventory at any given time, factoring in current stock levels, incoming supply, and outgoing orders.

MRP Logic

The set of principles and calculations used in Material Requirements Planning, aimed at ensuring the right materials are available for production at the right time.

Lot-For-Lot

An inventory management ordering policy where the order quantity is made exactly equal to the demand for the upcoming period.