Consider the Following Conditions for an Item Used in the Hess

question 145

Multiple Choice

Consider the following conditions for an item used in the Hess Company's manufacturing process: On-hand inventory: 80 units
Open orders (scheduled receipts) : 100 units
Backorders: 20 units
Reorder point: 150 units
Quantity per order: 50 units
Which of the following statements best describes Hess's situation regarding inventory replenishment?

• A)No action is required,since Hess's inventory position is greater than the reorder point.
• B)Hess should order one lot of 50 units to cover its backorders.
• C)Because it is incurring backorders,Hess should increase its reorder point.
• D)Hess should place an order for 50 units,since their inventory position is less than the reorder point.

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Definitions:

Financial Budgets

Detailed plans that outline an organization's financial goals, revenues, and expenses over a specific period.

Sales Forecast

Predictive analysis of future sales based on historical data, trends, and market analysis.

Budget Committee

A group responsible for coordinating the preparation of the budget, reviewing and approving budget proposals, and monitoring financial performance.

Master Budget

A master budget is a comprehensive financial planning document that combines all of an organization's individual budgets and plans into a single, unified plan.