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Hi tutor I have a question.
A retailer forecasts that sales in the first month of the year will be $600,000 and will then grow at 4% per month for the next three months. It prices its products by adding a mark-up of 20% to its purchase cost. The retailer always carries sufficient inventory to cover the next month’s forecast sales.
9. What is the forecast inventory (to the nearest dollar) at the end of the second month of the
year?
A) 540800, B)562432 C)648960 D)811200Please do not simply type out a full question and expect to be provided with a full answer.
You must have an answer in the same book in which you found the question, so ask about whatever it is that you are not clear about and then I will explain 🙂
The sales in the third month (and therefore the inventory at the end of the second month) are 600,000 x 1.04^2
This is the selling price of the inventory. The cost of the inventory is 600,000 x 1.04^2 / 1.20
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