10.7. A company manufactures and sells a seasonal product. Based on the salesforecast that follows, calculate a level production plan, quarterly endinginventories, and average quarterly inventories. Assume that the average quarterlyinventory is the average of the starting and ending inventory for the quarter. Ifinventory carrying costs are $3 per unit per quarter, what is the annual cost ofcarrying this anticipation inventory? Opening and ending inventories are zero.ANSWER. Annual inventory costs = $6000SalesProductionEnding InventoryAverage InventoryInventory CostQuarter 11000Quarter 22000Quarter 33000Quarter 42000Totals

Inventory management is an important part from financial point of view as inventory involves two…

Answered: 10.7. A company manufactures and sells…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 1PA: When prices are rising (inflation), which costing method would produce the highest value for gross...

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Similar questions

When prices are rising (inflation), which costing method would produce the highest value for gross margin? Choose between first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average (AVG). Evansville Company had the following transactions for the month. Calculate the gross margin for each of the following cost allocation methods, assuming A62 sold just one unit of these goods for $10,000. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)
A company wishes to establish an EOQ for an item for which the annual demandis $800,000, the ordering cost is $32, and the cost of carrying inventory is 20%.Calculate the following:a. The EOQ in dollars.b. Number of orders per year.c. Cost of ordering, cost of carrying inventory, and total cost.d. How do the costs of carrying inventory compare with the costs of ordering?
Q3) suppose that the demand for a product is 2000 per year, and the items are withdrawn uniformly. The order cost is 150$ and the inventory holding cost is 0.5$ per item per month. Assuming shortages are not allowed, find: 1- The economic order quantity. 2- The number of ordering during the year (order frequency). 3- The interval between two orders. 4- The annual cost.
ABM Enterprise reported business transactions for a certain month in 2020: Unit Price, P55.75; Variable Cost Per Unit, P25.50, and Total Fixed Cost, P45,375.00. a. Compute for the number of units to be sold in order to break-even. b. How is the amount of sales to break-even?
2. Hamid Company consumes inventory of 100,000 units of components per year. The carrying cost per unit is RO 3.50. The fixed order cost is RO 20 per order. The production planning is 365-day year. The delivery time is three days. a. Calculate and interpret the Economic Order Quantity (EOQ). b. At what inventory level should Hamid Company place another order. Interpret.
Nowlin Pipe & Steel has projected sales of 19,600 pipes this year, an ordering cost of $5 per order, and carrying costs of $1.60 per pipe. a. What is the economic ordering quantity? Economic ordering quantity b. How many orders will be placed during the year? Number of orders orders c. What will the average inventory be? Average inventory units units
= $ 15, Assume that D = 5,000, k = $ 186, c = and five setups (orders) are required per year. What is the percentage per unit per year of the implicit cost of holding inventory? (result in percentage)
If a firms inventory level of $10,000 represents 30 days sales, what is the annual cost od goods sold? What is the inventory turnover rate?
Assume a firm's inventory level of $11,000 represents 32 days' sales. Required: a. What is the annual cost of goods sold? (Use 365 days in a year. Do not round intermediate calculations. Round your answer to whole number.) b. What is the inventory turnover ratio? (Round your answer to 2 decimal places.) Annual cost of goods sold Inventory turnover ratio times per year
2. A company wants to develop a level production plan for a family of products. The opening inventory is 500 units, and a decrease to 300 units is expected by the end of the plan. The demand for each of the periods is given in what follows. All periods have the same number of working days. a. How much should the company produce each period? b. What will be the ending inventories in each period? Period (month) Sales Forecast Planned Production Inventory 1 2 3 5 6 ТОTAL 400 600 500 300 400 700 500 a. 451, b. (Ending inventory. 1=551, 2=402, 3=357, 4=503, 5=560, 6=300) O a. 450, b. (Ending inventory. 1=550, 2=400, 3=350, 4=500, 5=550, 6=300) O a. 460, b. (Ending inventory. 1=520, 2=400, 3=350, 4=510, 5=550, 6=300)
6. Karmee’s cost of goods sold averages 40 percent of the sales value. Karmee’s objective is to maintain a target inventory equal to 30 percent of the next month’s sales. Purchases of merchandise for resale are paid for in the month following the sale. Calculate for the purchases of merchandise that Karmee Company will need to make during February.
The rate of consumption of an item is 20 units per year. The cost of procurement (i.e. placing an order and receiving the goods) per order is Rs. 40. The unit cost is Rs. 100. Inventory carrying cost is 0.16% and it depends upon the average stock. Use Model I to determine: (i) EOQ (ii) If lead time is 3 months, determine the reorder point.

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