The Following Is the Forecast Level of Inventory (In Units)

question 30

Multiple Choice

The following is the forecast level of inventory (in units) for Aardvark Ltd.
If the company plans to sell 320 000 units, how many will they need to produce during the period?

• A) 330 000
• B) 315 000
• C) 305 000
• D) 320 000

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Definitions:

Fixed Manufacturing Costs

Expenses related to the production process that do not vary with the volume of production, such as salaries of supervisors and rent of the factory.

Markup

The amount added to the cost of goods to cover expenses and generate profit.

Estimated Costs

The anticipated expenses associated with a project or production, calculated before actual expenses are known.

Cost-Plus Approach

A pricing strategy where the selling price is determined by adding a specific markup to the cost of the product or service.