Question
In: Finance
A manufacturing company producing medical devices reported $108,000,000 in sales over the last year. At the...
A manufacturing company producing medical devices reported $108,000,000 in sales over the last year. At the end of the same year, the company had $42,000,000 worth of inventory of ready-to-ship devices.
a. Assuming that units in inventory are valued (based on COGS) at $2,000 per unit and are sold for $4,000 per unit, what are the annual inventory turns? The company uses a 20 percent per year cost of inventory. That is, for the hypothetical case that one unit of $2,000 would sit exactly one year in inventory, the company charges its operations division a $400 inventory cost. (Round the answer to 2 decimal places.)
b. What is the per unit inventory cost in $ for a product that costs $2,000? (Round the answer to 2 decimal places.)
Solutions
Expert Solution
We can solve the desired result as follows:
a) Sales = $108,000,000
Cost per Unit = $ 2,000
Selling Price per Unit = $ 4,000
Number of Units Sold = 108,000,000 / 4,000
= 27,000,000 units
Cost of Goods sold = 27,000,000 * 2,000
= $ 54,000,000
Flow Time of Inventory = Inventory at end / Cost of Goods sold
= 42,000,000 / 54,000,000
= 0.7778 years
Inventory Turns = 1 / Flow time of Inventory
= 1 / 0.7778
= 1.29 times
B) Cost of Inventory = 25%
Cost = $ 2,000
Per Unit Inventory cost = Cost per unit * cost of inventory * flow time
= 2,000 * 25% * 0.7778
= $ 388.89
Hope I am able to solve your concern. If you are satisfied hit a thumbs up !!
jeff jeffy answered 2 years agoRelated Solutions
Blue Elk Manufacturing reported sales of $743,000 at the end of last year; but this year,...
Blue Elk Manufacturing reported sales of $743,000 at the end of
last year; but this year, sales are expected to grow by 6%. Blue
Elkexpects to maintain its current profit margin of 22% and
dividend payout ratio of 20%. The firm’s total assets equaled
$500,000 and were operated at full capacity. Blue Elk’s balance
sheet shows the following current liabilities: accounts payable of
$80,000, notes payable of $35,000, and accrued liabilities of
$60,000. Based on the AFN (Additional Funds Needed)...
Blue Elk Manufacturing reported sales of $720,000 at the end of last year, but this year,...
Blue Elk Manufacturing reported sales of $720,000 at the end of
last year, but this year, sales are expected to grow by 7%. Blue
Elk expects to maintain its current profit margin of 21% and
dividend payout ratio of 30%. The following information was taken
from Blue Elk’s balance sheet: Total assets: $400,000 Accounts
payable: $80,000 Notes payable: $35,000 Accrued liabilities:
$70,000 Based on the AFN equation, the firm’s AFN for the current
year is _________.
a. -86,174
b. -105,324...
Blue Elk Manufacturing reported sales of $720,000 at the end of last year, but this year,...
Blue Elk Manufacturing reported sales of $720,000 at the end of
last year, but this year, sales are expected to grow by 8%. Blue
Elk expects to maintain its current profit margin of 23% and
dividend payout ratio of 10%. The following information was taken
from Blue Elk’s balance sheet:
Total assets:
$400,000
Accounts payable:
$80,000
Notes payable:
$45,000
Accrued liabilities:
$80,000
Based on the AFN equation, the firm’s AFN for the current year
is _____ .
A positively signed...
Fuzzy Button Clothing Company reported sales of $720,000 at the end of last year; but this...
Fuzzy Button Clothing Company reported sales of $720,000 at the
end of last year; but this year, sales are expected to grow by 9%.
Fuzzy Button expects to maintain its current profit margin of 21%
and dividend payout ratio of 15%. The firm’s total assets equaled
$500,000 and were operated at full capacity. Fuzzy Button’s balance
sheet shows the following current liabilities: accounts payable of
$75,000, notes payable of $25,000, and accrued liabilities of
$70,000. Based on the AFN (Additional...
Last year, Michelson Manufacturing reported $10,250 of sales, $3,500 of operating costs other than depreciation, and...
Last year, Michelson Manufacturing reported $10,250 of sales,
$3,500 of operating costs other than depreciation, and $1,250 of
depreciation. The company had no amortization charges, it had
$3,500 of bonds outstanding that carry a 6.5% interest rate, and
its federal-plus-state income tax rate was 21%. This year's data
are expected to remain unchanged except for one item, depreciation,
which is expected to increase by $725. By how much will the
depreciation change cause the firm's net after-tax income and its...
Last year, Michelson Manufacturing reported $10,250 of sales, $3,500 of operating costs other than depreciation, and...
Last year, Michelson Manufacturing reported $10,250 of sales,
$3,500 of operating costs other than depreciation, and $1,250 of
depreciation. The company had no amortization charges, it had
$3,500 of bonds outstanding that carry a 6.5% interest rate, and
its federal-plus-state income tax rate was 25%. This year’s data
are expected to remain unchanged except for one item, depreciation,
which is expected to increase by $725. By how much will the
depreciation change cause the firm’s net after-tax income to
change?...
Major Medical reported a net loss–AOCI in last year’s balance sheet. This year, the company revised...
Major Medical reported a net loss–AOCI in last year’s balance
sheet. This year, the company revised its estimate of future salary
levels causing its PBO estimate to decline by $12 million. Also,
the $22 million actual return on plan assets fell short of the $24
million expected return.
How does this gain and loss affect Major’s income statement,
statement of comprehensive income, and balance sheet?
Jingo Company has reported $750,000 in sales (25,000 units) for last year with a net operating...
Jingo Company has reported $750,000 in sales (25,000 units)
for last year with a net operating income of $25,000. At the
break-even point, the company's total contribution margin equals
$500,000. Based on this information, which of the following is
correct? *
a-The contribution margin ratio is 40%.
b-The break-even point is 24,000 units.
c-The variable expenses are 60% of sales.
d-The variable expenses per unit are $9 per unit.
At the end of last year, Bantern Corp. reported sales per shareof $20.54. Sales are...
At the end of last year, Bantern Corp. reported sales per share
of $20.54. Sales are expected to grow at a rate of 5% per year for
the forseeable future. The company’s profit margin has remained
steady at 18% for the last several years. Analysts expect that
Bantern will have a return on equity of 16% for the forseeable
future.What is Bantern’s retention rate?What is Bantern’s estimated EPS for the next year?What is Bantern’s free cash flow to equity for...
QUESTION E The sales of a factory, manufacturing bicyles, over the last 24 months were as...
QUESTION E
The sales of a factory, manufacturing bicyles, over the last 24
months were as follows:
MONTH
UNITS SOLD
1
1140
2
1180
3
1130
4
1180
5
1110
6
1200
7
1280
8
1340
9
1340
10
1240
11
1140
12
1230
13
1440
14
1530
15
1560
16
1350
17
1350
18
1420
19
1530
20
1530
21
1430
22
1430
23
1490
24
1570
It is obvious that the monthly sales are increasing, but it is...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Given an array of positive integers a, your task is to calculate the sum of every...
- Define “culture.” Software is defined by the Merriam-Webster Dictionary as "the programs that run on a...
- In humans, hypotrichosis (sparse body hair) is a rare autosomal recessive condition. Let h = hypotrichosis...
- Increase all of the listing prices by 5% for all listings under $500,000 and 10% for...
- Samsung Industry that requires you to act as a change agent to form an organizational change...
- Use fork() Create a program that reads characters from an input file. Use fork to create...
- A pension fund manager is considering three mutual funds. The first is a stock fund, the...
ADVERTISEMENT