Nantucket Industries Manufactures and Sells Two Models of Watches, Prime

question 186

Multiple Choice

Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 4,000 units of Prime and 1,100 units of Luxuria in 2019.The following estimates are given for 2019:

Nantucket had an inventory of 230 units of Prime and 125 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 360 units of Prime and 210 units of Luxuria.
Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $15. There were 100 units of Crimpson in stock at the end of 2018.The management does not want to have any stock of Crimpson at the end of 2019.
What is the amount budgeted for purchase of Crimpson in 2019?

• A) $61,950
• B) $16,275
• C) $17,775
• D) $16,500

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Definitions:

SBU

Acronym for Strategic Business Unit, a separately managed division or unit of a company that has its own mission, objectives, and competitors.

Means-end Fashion

A logical manner of thinking that focuses on achieving specific outcomes through the most efficient use of resources or actions.

Competitive Advantage

A condition or circumstance that puts a company in a favorable or superior business position compared to its competitors.

Sustainable

The ability to maintain or improve certain processes or states indefinitely without depleting resources or causing harmful effects on the environment or social fabric.