MDX Sales Corp

question 50

Multiple Choice

MDX Sales Corp.is expecting a 10% increase in sales next year.MDX has an inventory balance of $1,000,000 and uses the percent of sales forecasting method.Which of the following could explain why the inventory forecast of $1,100,000 might be too high?

• A) The current inventory balance of $1,000,000 is lower than usual because of a one-time end of year fire sale.
• B) The company is going to change its depreciation method in the coming year.
• C) The growth in sales could be as high as 15%.
• D) A fixed amount of inventory is required to do business, so inventory doesn't increase proportionally with sales.

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Definitions:

Frederick Taylor

was an American mechanical engineer who sought to improve industrial efficiency and is known as the father of scientific management.

Administrative Principles

Guidelines or rules that form the basis of administrative practices designed to efficiently organize and manage organizations.

Hawthorne Studies

A series of experiments on workplace productivity that highlighted the impact of social relations and worker satisfaction.

Worker Performance

The degree to which an employee accomplishes tasks and fulfills objectives efficiently and effectively, often evaluated against predetermined standards.