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QUESTION 2 A) On the average, a firm has 10 weeks of work-in-process, and annual cost of goods sold is $15 million. Assuming that the company works 50 weeks a year: a) What is the dollar value of the work-in-process? b) If the work-in-process could be reduced to 7 weeks and the annual cost of carrying inventorv was 20% of the inventory value, what would be the annual saving?

QUESTION 2 A) On the average, a firm has 10 weeks of work-in-process, and annual cost of goods sold is $15 million. Assuming that the company works 50 weeks a year: a) What is the dollar value of the work-in-process? b) If the work-in-process could be reduced to 7 weeks and the annual cost of carrying inventorv was 20% of the inventory value, what would be the annual saving?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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QUESTION 2 A) On the average, a firm has 10 weeks of work-in-process, and annual cost of goods sold is $15 million. Assuming that the company works 50 weeks a year: a) What is the dollar value of the work-in-process? b) If the work-in-process could be reduced to 7 weeks and the annual cost of carrying inventorv was 20% of the inventory value, what would be the annual saving? B). Warsop Factory sales are $10 million. The company spends $3.5 million for purchase of direct materials and $2.5 million for direct labor; overhead is $3.5 million and profit is $500,000. Direct labor and direct material vary directly with the cost of goods sold, but overhead does not. The company wants to triple its profit. By how much should the firm increase sales? By how much should the firm decrease material costs? By how much should the firm decrease labor cost? а. b. с.
Transcribed Image Text:QUESTION 2 A) On the average, a firm has 10 weeks of work-in-process, and annual cost of goods sold is $15 million. Assuming that the company works 50 weeks a year: a) What is the dollar value of the work-in-process? b) If the work-in-process could be reduced to 7 weeks and the annual cost of carrying inventorv was 20% of the inventory value, what would be the annual saving? B). Warsop Factory sales are $10 million. The company spends $3.5 million for purchase of direct materials and $2.5 million for direct labor; overhead is $3.5 million and profit is $500,000. Direct labor and direct material vary directly with the cost of goods sold, but overhead does not. The company wants to triple its profit. By how much should the firm increase sales? By how much should the firm decrease material costs? By how much should the firm decrease labor cost? а. b. с.
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