Question
Antonio Banderos & Scarves makes headwear that is very popular in the fall-winter season. Units sold are anticipated as: October 1,700 November 2,700 December 5,400
Antonio Banderos & Scarves makes headwear that is very popular in the fall-winter season. Units sold are anticipated as: |
October | 1,700 | |
November | 2,700 | |
December | 5,400 | |
January | 4,400 | |
14,200 | units | |
If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup. |
However, Antonio decides to go with level production to avoid being out of merchandise. He will produce the 14,200 items over four months at a level of 3,550 per month. |
a. | What is the ending inventory at the end of each month? Compare the unit sales to the units produced and keep a running total. (Leave no cells blank - be certain to enter "0" wherever required.) |
Ending Inventory | |
October | units |
November | units |
December | units |
January | units |
b. | If the inventory costs $4 per unit and will be financed at the bank at a cost of 12 percent, what is the monthly financing cost and the total for the four months? (Use 1 percent as the monthly rate.) (Leave no cells blank - be certain to enter "0" wherever required.) |
Inventory Financing Cost | |
October | $ |
November | |
December | |
January | |
Total financing cost | __________$ |
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