A Company Has a Sales Forecast for the Following Five

question 55

Multiple Choice

A company has a sales forecast for the following five months as shown in the table. If they have a beginning inventory of 100 units, what amount should be produced under a level plan in order for them to have an ending inventory of zero units at the end of the five-month period? $$\begin{array} { | l | c | } \hline { \text { Month } } & \text { Forecast } \\\hline \text { Tanuary } & 350 \\\hline \text { February } & 400 \\\hline \text { March } & 300 \\\hline \text { April } & 500 \\\hline \text { May } & 350 \\\hline\end{array}$$

• A)320 units per month
• B)360 units per month
• C)400 units per month
• D)440 units per month

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Definitions:

Mixed Costs

Expenses comprising both fixed and variable components, changing in total with the level of activity but not proportionately.

Merchandising Firm

A business that purchases finished goods for resale in order to make a profit, differentiating itself from manufacturing firms and service firms.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted; a measure of profitability.