Parlato Corp

question 18

Multiple Choice

Parlato Corp.has an inventory turnover rate of eight times.If its cost of goods sold is $150,000,what is characteristic of the company?

• A) The company will have sales of $1,200,000.
• B) The company will have gross margin of $1,200,000.
• C) The company will have average inventory of $18,750.
• D) The company will sell its inventory 1,200 times per year.

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Definitions:

Budgetary Slack

The practice of underestimating revenues or overestimating costs when preparing a budget to create a buffer for unexpected situations.

Production Budgets

Financial plans that outline the expected production costs based on projected sales and inventory requirements.

Participatory Process

A decision-making approach that involves input and active involvement from all stakeholders or group members.

Budgeting

The process of creating a plan to spend your money over a specified period, outlining projected income and expenses.