Deducing Changes in Inventories
Ferguson Products Inc., a manufacturer. reported $130 million in sales and a loss of $25 million in its absorption costing income statement provided to share holders. According to a CVP analysis prepared for management, the company's break-even point is $120 million in sales.
Required:
Assuming that the CVP analysis is correct is it likely that the company's inventory level increased, decreased, or remained unchanged during the year? Explain.
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