Question

Nazaro's Boot Company makes specialty boots for the rodeo circuit. At year-end, the company had (a) 300 pairs of boots in finished goods inventory and (b) 1,200 heels at a cost of $8 each in raw materials inventory. During the year, the company purchased 35,000 additional heels at $8 each and manufactured 16,600 pairs of boots. Required: 1. Determine the unit and dollar amounts of raw materials inventory in heels at year-end. Beginning inventory Purchases during the year Inventory available for production Less: Inventory transferred into production Ending inventory Number of units Cost per unit 1,200 $ 8 35,000 $ 8 36,200 $ 8 33,200 $ 8 3,000 $ 8 Total cost $ 9,600 280,000 289,600 265,600 $ 24,000 2. Compute the dollar amount of working capital that can be reduced at year-end if the ending heel raw material inventory is cut by half. Working capital

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Part 1
		No of units	Cost per unit	Total Cost
Beginning Inventory		1,200	$                        8	$          9,600
Add Purchase		35,000	$                        8	$     280,000
Inventory available for production		36,200	$                        8	$     289,600
Less Inventory transferred to production	16,600 Pairs*2 Heels	33,200	$                        8	$     265,600
Ending Inventory		3,000	$                        8	$       24,000
Part 2
Working capital will be reduced by	(3,000*$8)/2	$         12,000