If the planned sales for the month are $70,000,the merchandise budget calls for a planned stock-to-sales ratio of 2.3,and the financial leverage is 1.1,then the planned BOM inventory should be:

Question

Quizplus · Accepted Answer

The formula to calculate the planned BOM inventory is:

Planned BOM inventory = Planned sales x Planned stock-to-sales ratio x Financial leverage

Plugging in the given values, we get:

Planned BOM inventory = $70,000 x 2.3 x 1.1
Planned BOM inventory = $161,000

Therefore, the planned BOM inventory should be $161,000. Option C is the correct answer.

If the Planned Sales for the Month Are $70,000,the Merchandise