The Eagle Machine Company averaged $2 million in inventory last year, and the cost of goods sold was $10 million. Figure 12.5 shows the breakout of raw materials, work-in-process, and finished goods inventories. The best inventory turnover in the company’s industry is six turns per year. If the company has 52 business weeks per year, how many weeks of supply were held in inventory? What was the inventory turnover? What should the company do? Cost of Goods Sold$10,000,000FIGURE 12.5Calculating InventoryMeasures Using InventoryWeeks of Operation52Item NumberAverage Level1,400Unit ValueEstimator SolverRaw MaterialsTotal Value$70,0001$50.0021,000$32.00$32,0003400$60.00$10.00$24,000$24,00042,400$12,000$224,000800Work in Process$15.00$700.003207160$900.00$144,000$210,000$192,000280$750.00$800.0089240400$1,000.00$2,000.00$400,000$120,00010Finished Goods11601240$3,500.00$140,0001350$2,800.0$5,000.00$140,000$100,000142040$4,200.00$168,000$2,000,00015TotalAverage Weekly Sales at Cost$192,308Weeks of Supply10.4Inventory Turnover5.0

Inventory = $2,000,000 COGS = $10,000,000 Best Inventory Turnover = 6 turns per year 52 business…

Answered: Cost of Goods Sold $10,000,000 FIGURE…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

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Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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The Eagle Machine Company averaged $2 million in inventory last year, and the cost of goods sold was $10 million. Figure 12.5 shows the breakout of raw materials, work-in-process, and finished goods inventories. The best inventory turnover in the company’s industry is six turns per year. If the company has 52 business weeks per year, how many weeks of supply were held in inventory? What was the inventory turnover? What should the company do?

Cost of Goods Sold
$10,000,000
FIGURE 12.5
Calculating Inventory
Measures Using Inventory
Weeks of Operation
52
Item Number
Average Level
1,400
Unit Value
Estimator Solver
Raw Materials
Total Value
$70,000
1
$50.00
2
1,000
$32.00
$32,000
3
400
$60.00
$10.00
$24,000
$24,000
4
2,400
$12,000
$224,000
800
Work in Process
$15.00
$700.00
320
7
160
$900.00
$144,000
$210,000
$192,000
280
$750.00
$800.00
8
9
240
400
$1,000.00
$2,000.00
$400,000
$120,000
10
Finished Goods
11
60
12
40
$3,500.00
$140,000
13
50
$2,800.0
$5,000.00
$140,000
$100,000
14
20
40
$4,200.00
$168,000
$2,000,000
15
Total
Average Weekly Sales at Cost
$192,308
Weeks of Supply
10.4
Inventory Turnover
5.0

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