Shoe Time Company has been in business since 2 years and sells 5,000 pairs of shoes each month. The company wants to maintain an ending inventory equal to 25 percent of its next month's sales. If Shoe Time anticipates its recent advertising campaign will increase monthly sales by 20%, what is the new budgeted monthly ending inventory balance?

Question

Erik Byrd

Business

11 April, 13:35

Shoe Time Company has been in business since 2 years and sells 5,000 pairs of shoes each month. The company wants to maintain an ending inventory equal to 25 percent of its next month's sales. If Shoe Time anticipates its recent advertising campaign will increase monthly sales by 20%, what is the new budgeted monthly ending inventory balance?

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Alessandro Bray · Answer 1

1,500 pairs of shoes

Explanation:

Present sales: 5,000 pairs of shoes

If Shoe Time anticipates its recent advertising campaign will increase monthly sales by 20%, future sales = 5,000*1,20 = 6,000 pairs of shoes.

If Shoe Time wants to maintain an ending inventory equal to 25 percent of its next month's sales, the new budgeted monthly ending inventory balance will be:

6,000*0,25 = 1,500 pairs of shoes