Question

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.)

Answer 1

Compute compony inventory turn as shown below cost sold of goods Company inventory turne = Un and Inventory a Cost of goods sold - sale in wrik & cost per units Sale in units : $108000000 wal 27000 units 4000 peranit Cost of sold goods 27000 units X 2000 unit per $54000000 Compony inverting down = $54000000 $42000000 1.2857 = 1.29 approximately 11:29 times apoximately