Inventory management: 1. Akers Inc. maintains average inventory of $1000,000 (at
ID: 391758 • Letter: I
Question
Inventory management:
1. Akers Inc. maintains average inventory of $1000,000 (at cost). Last year Aker’s sales volume was 10,000,000 and cost of goods sold was $7,000,000. Akers has determined that its inventory carrying cost is 15 percent annually.
a. What was the inventory turnover rate?
b. How much was the inventory turnover rate?
2. The following table contains data about the inventory for five items at Jones Corporation. Complete the missing items in the table.
Item
Beginning Unite Inventory
Ending Unit
Inventory
Avg Unit Inventory
Annual Unit
Sales
Inventory Turnover
1
150,000
120,000
400,000
2
40,000
60,000
80,000
3
85,000
97,000
190,000
4
200,000
170,000
350,000
5
50,000
60,000
165,000
Total
Item
Beginning Unite Inventory
Ending Unit
Inventory
Avg Unit Inventory
Annual Unit
Sales
Inventory Turnover
1
150,000
120,000
400,000
2
40,000
60,000
80,000
3
85,000
97,000
190,000
4
200,000
170,000
350,000
5
50,000
60,000
165,000
Total
Explanation / Answer
1)
a. ITO = Sales / Avg. Inventory = 7,000,000/1,000,000 = 7 times
b. Inventory carrying cost = cost of inventory*carrying cost percentage = 1,000,000*15% = $150,000
2) Avg Inventory = ( Beginning + Ending ) / 2
Inventory Turnover = Sales / Avg. Inventory
Item Avg Unit Inventory Inventory Turnover
1. 135,000 2.963
2. 50,000 1.600
3. 91,000 2.088
4. 185,000 1.891
5. 55,000 3.000
Total 516,000 2.3
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.