Planning Systems, Has Forecast the Following Unit Sales and Production

question 86

Multiple Choice

Planning Systems, has forecast the following unit sales and production for the next year, by quarter: A finished unit requires one unit of material A and two units of material B. There should be enough material on hand at the end of each quarter to meet 20% of the next quarter's production needs. There are no work-in-process inventories.
What is the ending inventory for material A for quarter 2?

• A) 24
• B) 28
• C) 30
• D) 100

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Definitions:

Sunk Cost

A cost that has already been incurred and cannot be recovered, which should not influence future business decisions.

Stand-Alone Principle

An evaluation method in project management and capital budgeting where a project is assessed on its own merits without considering the company's overall financial position.

Capital Projects

Large, expensive, long-term projects intended to build upon, add to, or improve a property or system.

Operating Cash Flow

A measure of the cash a company generates from its regular business operations, excluding financing and investment activities.