A retailer uses the percentage variation method in inventory level planning.If the store plans an average monthly stock of $200,000 and September sales are estimated at 15 percent more than average,the store's planned inventory level for September is _____.

Question

Quizplus · Accepted Answer

Using the percentage variation method, we can find the planned inventory level for September by multiplying the average monthly stock by 1 plus the percentage increase in sales:

Planned Inventory Level = Average Monthly Stock x (1 + Percentage Increase in Sales)

Planned Inventory Level for September = $200,000 x (1 + 15%) 
Planned Inventory Level for September = $200,000 x 1.15 
Planned Inventory Level for September = $230,000

Therefore, the best choice is C) $215,000, as it is the closest value to the calculated planned inventory level for September ($230,000) and is likely a more realistic estimate.

A Retailer Uses the Percentage Variation Method in Inventory Level