Rizzo Corporation had 17,000 units of brake calipers on hand at the end of 2008.The company's inventory policy was to maintain an ending inventory equal to 15% of the current year's sales.During 2009,Rizzo sold 210,000 units of calipers.How many units did Rizzo purchase in 2009?

Question

Quizplus · Accepted Answer

Rizzo sold 210,000 units of calipers in 2009. To maintain an ending inventory equal to 15% of the current year's sales, Rizzo should have 210,000 * 0.15 = 31,500 units of ending inventory. Since Rizzo had 17,000 units of ending inventory at the end of 2008, Rizzo must have purchased 31,500 - 17,000 = 14,500 units in 2009.

Rizzo Corporation Had 17,000 Units of Brake Calipers on Hand