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:

Depreciation Expense

This is the allocation of the cost of a tangible asset over its useful life.

Revenue

Income generated from normal business operations, usually from the sale of goods and services to customers.

Lessor

An entity or individual that leases or rents out an asset to another party, known as the lessee.

Lessee

A lessee is an individual or entity that leases an asset from another party, known as the lessor.