Which approach helps a business keep stock based on sales and allow spending based on a planned budget?

Which approach helps a business keep stock based on sales and allow spending based on a planned budget?

• A. Cash Discounts
• B. Perpetual inventory control
• C. Unit Control
• D. Physical Inventory Control

Answer: (C)

Unit-based inventory control ties stock levels to sales and keeps spending within a planned budget. By managing inventory in individual units, a business can set reorder points and quantities that reflect how quickly each item sells, so inventory moves with demand. At the same time, budgeting governs how much is spent on replenishment, ensuring purchases stay within financial plans. This approach makes stock levels responsive to sales while limiting expenditure to what was planned. Other options focus on payment terms, continuous tracking without budget linkage, or counting physical stock without tying to budget decisions, so they don’t automatically align inventory with sales and a budget the way unit-based control does.

Unit-based inventory control ties stock levels to sales and keeps spending within a planned budget. By managing inventory in individual units, a business can set reorder points and quantities that reflect how quickly each item sells, so inventory moves with demand. At the same time, budgeting governs how much is spent on replenishment, ensuring purchases stay within financial plans. This approach makes stock levels responsive to sales while limiting expenditure to what was planned. Other options focus on payment terms, continuous tracking without budget linkage, or counting physical stock without tying to budget decisions, so they don’t automatically align inventory with sales and a budget the way unit-based control does.