Schrank Company Is Trying to Decide How Many Units of Merchandise

question 13

Multiple Choice

Schrank Company is trying to decide how many units of merchandise to order each month.Company policy is to have 20% of the next month's sales in inventory at the end of each month.Projected sales for August,September,and October are 30,000 units,20,000 units,and 40,000 units,respectively.How many units must be purchased in September?

• A)14,000.
• B)20,000.
• C)22,000.
• D)24,000.
• E)28,000.

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Definitions:

Market Participant

An entity or individual with the willingness and ability to buy, sell, or otherwise engage in transactions in a market.

Risk Aversion

The reluctance or avoidance of undertaking investment with uncertain outcomes, preferring outcomes that are more predictable.

Owner-Manager

An individual who both owns a significant part of a company and is actively involved in its management.

Agency Relationship

A situation where one party, known as the agent, is authorized to act on behalf of another, called the principal, in dealing with third parties.