A Firm Is Planning for Next Year and Has Developed

question 56

Multiple Choice

A firm is planning for next year and has developed the following information. $\begin{array}{ll}\text { Thisyear's sales } & \$ 7.90 \mathrm{M} \\\text { Next year's sales } & \$ 9.48 \mathrm{M} \\\text { This year's inventory } & \$ 2.37 \mathrm{M}\\\text { This ye a1's cost ratio* } & 60.0 \% & * \text { Cost of goods sold (COGS) } \\\text { Next year's cost ratio* } & 55.0 \% & \text { as a } \% \text { of sales }\end{array}$ What inventory balance should be included in next year's plan if management intends to increase inventory turnover by one turn in the coming year? Calculate using ending balances and the COGS formulation of inventory turnover.

• A) $1.74M
• B) $1.90M
• C) $1.58M
• D) $1.24M

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Definitions:

Narthex

The entrance or lobby area, typically located at the west end of an early Christian or medieval church, used for gathering before services.

Atrium

The central reception room of a Roman domus that is partly open to the sky. Also, the open, colonnaded court in front of and attached to a Christian basilica.

Bema

is a raised platform within a church or synagogue, used primarily for readings and sermons, highlighting its importance in religious ceremonies.

Nave

The central area of an ancient Roman basilica or of a church, demarcated from aisles by piers or columns.