Problem 5 SHOW ALL WORK Chapter 12: The Marlin Company operates 50 weeks a year,
ID: 2758961 • Letter: P
Question
Problem 5 SHOW ALL WORK
Chapter 12: The Marlin Company operates 50 weeks a year, and its cost of goods sold last year was $1,800,000. The firm carries six items in inventory: three raw materials, two work-in-process items, and one finished good. The following table shows the company’s last year’s average inventory levels for these items, along with their unit values.
A. What is their average aggregate inventory value?
B. How many weeks of supply does the firm have?
C. What was their inventory turnover last year?
D. The turnover ratio is widely used because it is a common measure that links to the financial statements of the firm.Discuss the benefits and drawbacks of using this measure.
Explanation / Answer
Answer:A
Answer:B Average weekly sales at cost=$1800000/50 weeks=$36000 /week
Weeks of supply=Average aggregate inventory value/Average weekly sales at cost
=$320250/$36000=8.89 weeks
Answer:C Inventory turnover=Annual Sales (At Cost) / Average Aggregate Inventory Value
=1800000/320250=5.62 times
Answer:D because it considers sale at cost .
Part number Average Level unit value Total value RM-1 1750 15 26250 RM-2 1500 20 30000 RM-3 1900 10 19000 WIP-1 1500 40 60000 WIP-2 1300 50 65000 FG-1 1000 120 120000 Average aggregate inventory value 320250