Question

Craig’s inventory report shows shrinkage equal to 2.4% of sales for a period. He is expected to maintain a shrinkage of no more than 1.5%. If sales volume for the period is $1.8 million, how much is he over his expected goal?

Answer 1

Craig is 16,200 over his expected goal.

Sales volume = 1,800,000
Expected Shrinkage = 1.5% of sales or 0.015
Actual Shrinkage = 2.4$ of sales or 0.024

Expected Shrinkage Value:
1,800,000 x 0.015 = 27,000

Actual Shrinkage Value:
1,800,000 x 0.024 = 43,200

Expected Shrinkage : 27,000
less: Actual Shrinkage: 43,200
Difference (over) under (16,200)

Craig is 16,200 over his expected goal.