McDonaldsInventory $128.40Revenue $17, 140.50COGS $ 11943,70Gross Profit $5,196.

Question

McDonaldsInventory $128.40Revenue $17, 140.50COGS $ 11943,70Gross Profit $5,196.80
Wendy'sInventory: $54.40Revenue: 3148.90COGS: 1634.60Gross Profit: 1514.40
A. What were McDOnalds inventory turns? What were wendy's Inventory Turns?
B. Suppose it costs both McDonalds and Wendy's $ 3 (COGS) per their value meal offerings each sold at the same price of $4. Assume that the cost of inventory for both companies is 30 percent a year. Approx. how much does McDOnald's save in inventory cost per value meal compared to that of Wendy's. yOu may assume the inventory turns are independent of prices.

Explanation / Answer

1. Inventory Turnover = Cost of Goods Sold/Average Inventory

For Mcdonald

Inventory Turnover = $11943.70/$128.40 = $93.019

For Wendy's

Inventory Turnover = $1634.60/$54.40 = $30.04

2.

McDonalds saves 0 as compared to Wendy's on inventory cost as both have 3*.3 = $0.9 for their inventory cost per value meal.

This is because McDonalds might be having low inventory cost but other expenses being higher than Wendy's leading to same COGS.

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.