Serene Corporation had 17,000 units of brake calipers on hand at the end of 2016.The company's inventory policy was to maintain an ending inventory equal to 15% of the current year's sales.During 2016,Serene sold 210,000 units of calipers.How many units did Serene purchase in 2016?

Question

Quizplus · Accepted Answer

The correct answer is A.The company's inventory policy was to maintain an ending inventory equal to 15% of the current year's sales. So, the ending inventory should be 210,000 * 15% = 31,500 units. Since the company had 17,000 units on hand at the end of 2016, it must have purchased 31,500 - 17,000 = 14,500 units during the year. However, the question asks for the number of units purchased in 2016, which is 14,500 + 17,000 = 224,500 units.

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