Butler Automotive developed a new diagnostic testing procedure that is expected to increase sales by $10,000 per month.As more drivers bring in their vehicles,Butler expects to also do more oil changes and brake repairs.As a result,inventory levels of oil and brake parts must be increased by $5,000.Revenues from oil changes and brake jobs are expected to increase by $4,000 per month.An example of an increase in net working capital requirements from the new diagnostic testing procedure is the

Question

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The increase in inventory levels of oil and brake parts of $5,000 is an example of an increase in net working capital requirements, as it represents an increase in the amount of cash tied up in inventory. The other options are either increases in revenue or increases in all activities, but they do not necessarily represent an increase in net working capital requirements.

Butler Automotive Developed a New Diagnostic Testing Procedure That Is