Jeff, a Manager at the Flux Soap Store, Lowered the Reorder

question 73

Multiple Choice

Jeff, a manager at the Flux Soap Store, lowered the reorder point for Butterscotch-Lemon soap from 33 percent of maximum to 20 percent of maximum.What is Jeff likely to observe?

• A)The level of Butterscotch-Lemon soap in stock should increase.
• B)Sales of Butterscotch-Lemon soap should decrease.
• C)Sales of Butterscotch-Lemon soap should increase.
• D)The level of Butterscotch-Lemon soap in stock should drop.

---

Definitions:

Cash Cycle

The period of time between a company's purchase of inventory and the receipt of cash from accounts receivable.

Operating Cycle

The duration of time from the purchase of inventory to the collection of cash from sales, reflecting the efficiency of a company's operations.

Cash Flow Time Line

Graphical representation of the operating cycle and the cash cycle.

Cash Cycles

The process that covers the time span between a company’s outlay of cash for materials and the collection of cash from customers for goods or services sold.