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At the beginning of 2016, an inventory contains 55,000 units. It is estimated that 120,000 units will be used during the year. It is intended that inventory be reduced to 40,000 units at the end of the year. How many units should be purchased during the year? A. 65,000 B. 105,000 C. 115,000 D. 120,000 E. None of these.

Question

At the beginning of 2016, an inventory contains 55,000 units. It is estimated that 120,000 units will be used during the year. It is intended that inventory be reduced to 40,000 units at the end of the year. How many units should be purchased during the year? A. 65,000 B. 105,000 C. 115,000 D. 120,000 E. None of these.

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Solution

To solve this problem, we need to determine how many units will be needed throughout the year and then subtract the amount of inventory already available.

Step 1: Determine the total units needed for the year. This is the sum of the units that will be used during the year and the desired inventory at the end of the year.

Total units needed = Units used during the year + Desired end inventory Total units needed = 120,000 units + 40,000 units Total units needed = 160,000 units

Step 2: Subtract the initial inventory from the total units needed to find out how many units should be purchased.

Units to be purchased = Total units needed - Initial inventory Units to be purchased = 160,000 units - 55,000 units Units to be purchased = 105,000 units

So, the answer is B. 105,000 units should be purchased during the year.

This problem has been solved

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