The Eagle Machine Company averaged $2 million in inventory last year, and the cost of goods sold was $10 million. Figure 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$10,000,000Weeks of Operation52Item NumberAverage Level1,4001,000400Unit Value$50.00$32.00$60.00$10.00$15.00$700.00Total Value$70,000$32,000$24,000Raw Materials12$24,000$12,000$224,000$144,000$210,000$192,000$400,00042,400800Work in Process3207160$900.00280$750.00240$800.00400$1,000.00$2,000.00$3,500.00$2,800.00$5,000.00$4,200.0010Finished Goods$120,000$140,000$140,000$100,000$168,000$2,000,00011601240135014201540TotalAverage Weekly Sales at Cost$192,308Weeks of Supply10.4Inventory Turnover5.0

Average Aggregate Inventory refers to the total average value of all items which are held in…

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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

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