Question

3.

A.

Nordstrom stores are quite upset to learn that Brad White, their best customer is doing work for JC Penney. They send spies to Penney and determine that he is helping them develop a line of leather underwear. They decide to compete.

Currently, they have $250,000 in underwear stock and $13,000 in order for the month. They plan sales for the month of $375,000 based on regularly planned sales and increased sales due to the new line. Existing boring underwear will take markdowns of $10,000. They need to have an inventory of $125,000 at the end of the month to be ready for Christmas sales. How much leather underwear can they buy this month?

b.

They contact Hanes to make the underwear for them. Hanes has made similar items in the past and has a pretty good idea of the costs involved. They are as follows:

Labor $500 for 2500 pieces. $350 for a 30 yard bolt. $40 for 90 buttons with Brad's face on them $100/500 bags Fabric Buttons Packaging Each pair will need 2.5 yards of fabric and 3 buttons. What is COGS?

Answer 1

A.	Particulars	Amount In $
	Exected Sales	375000
	Less: Decrease in sales
	Opening Stock	250000
	In Order	13000
	Minimum Inventory to be maintained	125000
	Threfore, the leather underwear can be bought	13000
B.	Particulars	Compuation	Amount in $
	Labour for 2500 pieces	500$*2500 pieces	1250000
	Fabric for pair	2500 pieces/2 pieces*2.5 yards* 350$/30yard	36458.33333
	Buttons	2500 pieces*3 buttons/ 2 pieces *40/90 buttons	1666.666667
	Packaging	2500 pieces *100$/500 pieces	500
		Therefore COGS	1288625