Bambino Sporting Good makes baseball gloves that are very popular in the spring
ID: 2677610 • Letter: B
Question
Bambino Sporting Good makes baseball gloves that are very popular in the spring and the early summer season. Units sold are anticipates as follows:March 3400
April 7400
May 11800
June 9800
Total 32400
If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup
The production manager thinks the above assumption is too optimistic and decides to go with level production to avoid being out of merchandise. He will produce 32,500 units over four months at a level of 8100 per month.
a) What is the ending inventory at the end of each month?
March
April
May
June
b) if the inveotry cost $14.00 per unit and will be financed at the bank at a cost of 6 percent what is the monthly financing cost and the total for the four months? (Use .005 percent as the monthly rate.)
Please show detail of work.
Explanation / Answer
a)
Units Produced
Units Sold
Change in inventory
Ending Inventory
8,100
3,400
+4,700
4,700
April
8,100
7,400
+700
5,400
May
8,100
11,800
–3,700
1,700
June
8,100
9,800
–1,700
0
Ending Inventory
Cost per
Unit ($14)
Inventory Financing Cost(6%)
March
4,700
$65,800
$3,948
April
5,400
75,600
4,536
May
1,700
23,800
1,428
June
0
0
0
Total
11,800
$165,200
$9,912
b.
Ending Inventory
Cost per
Unit ($7)
Inventory Financing Cost
October
$3,000
$21,000
$1,680
November
4,000
28,000
2,240
December
1,000
7,000
560
January
0
0
0
$4,480
a)
Units Produced
Units Sold
Change in inventory
Ending Inventory
March8,100
3,400
+4,700
4,700
April
8,100
7,400
+700
5,400
May
8,100
11,800
–3,700
1,700
June
8,100
9,800
–1,700
0
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