Chu Company Provided the Following Information Related to Its Inventory

question 89

Multiple Choice

Chu Company provided the following information related to its inventory sales and purchases for December 2013 and the first quarter of 2014: $$\begin{array} { | l | c | c | c | c | c | } \hline & \text { Dec. } 2013 & \text { Jan. } 2014 & \text { Feb. 2014 } & \text { Mar. } 2014 \\\hline & \text { (Actual) } & \text { (Budgeted) } & \text { (Budgeted) } & \text { (Budgeted) } \\\hline \text { Cost of goods sold } & \$ 80,000 & \$ 140,000 & \$ 180,000 & \$ 120,000 \\\hline\end{array}$$ Desired ending inventory levels are 25% of the following month's projected cost of goods sold. Budgeted purchases of inventory in February 2014 would be:

• A) $135,000.
• B) $165,000.
• C) $180,000.
• D) $225,000.

---

Definitions:

Hybrid Strategy

A hybrid strategy in business combines cost leadership and differentiation approaches to provide value to customers while maintaining competitive pricing.

Fundamental Analysis

An approach to evaluating investments by analyzing the financial health, business model, and economic factors affecting an entity to estimate its intrinsic value.

Technical Analysis

Research to identify mispriced securities that focuses on recurrent and predictable stock price patterns and on proxies for buy or sell pressure in the market.