Question

Question Help Jack Jones, the materials manager at Precision Enterprises, is beginning to look for ways to reduce inventories. A recent accounting statement shows that the inventory investment for raw materials is $3,976,600, for work-in-process is $6,622,000, and for finished goods is $2,883,000. This year's cost of goods sold will be about $25,324,000. Assume that there are 52 business weeks per year. a. Express total inventory as weeks of supply. The weeks of supply isweeks. (Enter your response rounded to one decimal place.) b. Express total inventory as inventory turns. The inventory turnover is turns per year. (Enter your response rounded to one decimal pla

Answer 1

Total inventory = raw material + work in progress + finished goods

= 3,976,600 + 6,622,000 + 2,883,000 = $ 13481600

A. Weeks of supply = (Total inventory * 52) / Cost of goods sold

= 13481600 * 52 / 25,324,000 = 27.68 weeks

B. Turnover = cost of goods sold / total inventory

= 25,324,000 / 13481600 = 1.88 turns