a. Jeri Company sells three different categories of tools (small, medium and large). The cost and market
Question:
a. Jeri Company sells three different categories of tools (small, medium and large). The cost and market value of its inventory of tools are as follows.
Determine the value of the company's inventory under the lower-of-cost-or-market approach.
b. Early in 2017, Fedor Company switched to a just-in-time inventory system. Its sales and inventory amounts for 2016 and 2017 are shown below.
Determine the inventory turnover and days in inventory for 2016 and 2017. Discuss the changes in the amount of inventory, the inventory turnover and days in inventory, and the amount of sales across the 2 years.
Small Medium Large Cost 64,000 290,000 152,000 Market $ 61,000 260,000 167,000 2016 2017 Sales revenue Cost of goods sold Beginning inventory Ending inventory $3,120,000 $3,713,000 ,200,000 1,425,000 210,000 90,000 170,000 210,000
Step by Step Answer:
a The lowest value for each inventory type is Small 61000 Medium 26000...View the full answer
Accounting Tools for Business Decision Making
ISBN: 978-1118096895
6th edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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