Ecology Co Ending Inventory for Each Month Should Be 20% of the the Following

question 22

Multiple Choice

Ecology Co.sells a biodegradable product called Dissol and has predicted the following sales for the first four months of the current year:
$\begin{array}{ccccc} & \text { Jan. } & \text { Feb. } & \text { March } & \text { April } \\\text { Sales in units } & 1,700 & 1,900 & 2,100 & 1,600\end{array}$

Ending inventory for each month should be 20% of the next month's sales,and the December 31 inventory is consistent with that policy.How many units should be purchased in February?

• A) 1,860
• B) 1,900
• C) 1,940
• D) 1,980
• E) 2,320

---

Definitions:

Cash Flow

Cash flow refers to the net amount of cash being transferred in and out of a business, indicating its financial health.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment, by discounting future cash flows to their present value and subtracting the initial investment cost.

Canadian Dollars

The official currency of Canada, denoted as CAD.

Mexican Pesos

The currency of Mexico, used in financial transactions within the country.