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Bill Anderson, the Materials Manager of XYZ Firm, is interested in assessing the inventory management performance of the firm. The following (partial) Annual Income Statement and the four Quarterly Balance Sheet for the fiscal year 202X has been obtained.

XYZ Company, Income Statement, FY 202X

Net sales $950,000
Cost of goods sold 620,000
Operating expenses 190,000

XYZ Company, Quarterly Balance Sheet, FY 202X

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Cash $46,000 $37,900 $82,000 $54,000
Accounts receivable 55,500 46,000 123,000 72,000
Inventory:
Finished goods 42,440 35,080 12,540 39,050
Work-in-process 27,780 25,770 20,120 32,990
Materials 32,580 79,000 52,910 22,670
Plant assets 510,000 510,000 540,000 540,000

Required:
a. How many weeks of supply does the XYZ Company carry?
b. How many inventory turns did the company went through in FY 202X?

Sagot :

Tundexi

Answer:

Net sales = $950,000

Cost of goods sold = $660,000

         Finished Goods$     W.I.P$           Materials$

Q1              42,440             27,780             32,580

Q2             35,080             25,770             79,000

Q3              12,540             20,120              52,910

Q4              39,050            32,990             22,670

Total          129,110            106,660            187,160

a. Inventory Turnover Ratio

                                Sales/F.G             COGS/WIP       COGS/R.M.

                         950,000/129,110   66,000/106,660  660,000/187,160

                              7.35 times              6.18 times           3.52 times

b. Inventory weeks on hand (i.e. 52 weeks/inventory)

                               52/7.35                    52/6.18               52/3.52

                                  7.07                          8.41                     14.77

                               7 weeks                   8 weeks              15 weeks

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