Nazaro’s Boot Company makes specialty boots for the rodeo circuit. At year-end, the company had (a) 300 pairs of boots in finished goods inventory and (b) 1,200 heels at a cost of $8 each in raw materials inventory. During the year, the company purchased 35,000 additional heels at $8 each and manufactured 16,600 pairs of boots. Required 1. Determine the unit and dollar amounts of raw materials inventory in heels at year-end. Analysis Component 2. Compute the dollar amount of working capital that can be reduced at year-end if the ending heel raw material inventory is cut by half.
Nazaro’s Boot Company makes specialty boots for the rodeo circuit. At year-end, the company had (a) 300 pairs of boots in finished goods inventory and (b) 1,200 heels at a cost of $8 each in raw materials inventory. During the year, the company purchased 35,000 additional heels at $8 each and manufactured 16,600 pairs of boots. Required 1. Determine the unit and dollar amounts of raw materials inventory in heels at year-end. Analysis Component 2. Compute the dollar amount of working capital that can be reduced at year-end if the ending heel raw material inventory is cut by half.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Nazaro’s Boot Company makes specialty boots for the rodeo circuit. At year-end, the company had
(a) 300 pairs of boots in finished goods inventory and (b) 1,200 heels at a cost of $8 each in raw materials
inventory. During the year, the company purchased 35,000 additional heels at $8 each and manufactured
16,600 pairs of boots.
Required
1. Determine the unit and dollar amounts of raw materials inventory in heels at year-end.
Analysis Component
2. Compute the dollar amount of
material inventory is cut by half.
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