How Many Shovels Should Peak Stores Purchase for December?

How does Peak Stores determine the number of shovels to purchase for December?

Peak Stores should purchase 1,630 shovels for December.

Calculating Shovel Purchase for December

Peak Stores wants to have 500 shovels in ending inventory on December 31. Budgeted sales for December are 1,550 shovels. The November 30 inventory was 420 shovels. To determine the number of shovels Peak Stores should purchase for December, we need to consider the desired ending inventory and the expected sales for the month. The desired ending inventory is given as 500 shovels. The November 30 inventory is 420 shovels. Therefore, the difference between the desired ending inventory and the November 30 inventory is: 500 - 420 = 80 shovels This means that Peak Stores needs to increase its inventory by 80 shovels to meet the desired ending inventory. The budgeted sales for December are 1,550 shovels. Since Peak Stores wants to have 500 shovels in ending inventory, the total number of shovels needed for December is: 1,550 + 500 = 2,050 shovels However, since there are already 420 shovels in inventory, the number of shovels that Peak Stores should purchase for December is: 2,050 - 420 = 1,630 shovels Therefore, the correct answer is option OD. Peak Stores should purchase 1,630 shovels for December.
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