If a company has a policy of maintaining an inventory of finished goods at a specified percentage of the next month's budgeted sales,budgeted production for January will exceed budgeted sales for January when budgeted
A)February sales exceed budgeted January sales.
B)January sales exceed budgeted December sales.
C)January sales exceed budgeted February sales.
D)December sales exceed budgeted January sales.

Question

Quizplus · Accepted Answer

If February sales are expected to be higher than January sales, the company will produce more in January to meet the policy of maintaining inventory at a specified percentage of the next month's sales, thus exceeding budgeted sales for January.

If a Company Has a Policy of Maintaining an Inventory