Emogene Edgerton is Chief Executive Officer of Vanlandingham Robotics. The robotics industry is a rapidly growing market with estimates of it moving from $26 billion in 2020 to $74 billion by 2026. However, the competition is fierce. In the healthcare sector alone, there are over 200 companies involved in robotics manufacturing.

Vanlandingham Robotics is a relatively new and small company. Despite that fact, Vanlandingham Robotics has a lot going for it. Jodie Johansson is the Chief Engineer. Jodie is considered the best in the industry. Another valuable employee is Alfonso Abdalla, Chief Financial Officer. Alfonso is data driven and an expense management savant. He understands that with such high-quality competition, in order to make the profit margins Emogene desires then, revenue isn't enough. Low expenses are a must!

The key to success in managing expenses is to focus on Supply Chain Management; specifically, the area of purchasing management. The formula is simple, reduce purchase spend and profits will increase (assuming all else remains constant). How can Vanlandingham Robotics do this? They must increase their profits through smarter purchasing.

Alfonso decides he must talk with Aaron Lykes, Director of Supply Chain Management, about the actions required to ensure low expenses. As they discussed the matter Aaron said he would design a scorecard with the critical metrics so they can track the results. They agreed on the following metrics: Return on Assets (ROA), Monthly Inventory Turnover Ratio, and Annual Inventory Turnover Ratio. In addition, Aaron was going to assign Dori Lenser, Purchasing Manager, to complete a make-or-buy break-even analysis on some of their expensive supply items. Possibly, they will discover additional opportunities to reduce their purchase spend.

Accounting Information for Ending Inventory and Cost of Goods Sold:

Vanlandingham Robotics has an ending inventory of $295,000 as of December 31, 2019 and the following accounting information:

MONTH	ENDING INVENTORY	COST OF GOODS SOLD
January 2020	$205,000		$1,225,000
February	$315,000		$1,275,000
March	$230,000		$1,450,000
April	$335,000		$1,500,000
May	$470,000		$850,000
June	$265,000		$950,000
July	$80,000		$1,550,000
August	$142,000		$1,400,000
September	$225,000		$1,750,000
October	$240,000		$900,000
November	$90,000		$2,125,000
December	$380,000		$3,425,000

The last action in their cost reducing initiative was for Dori to complete a make-or-by break-even analysis. Dori obtained the following costs for making and buying of a key component for their robots.

COSTS	MAKE	BUY
Fixed Costs	$13,000		$700
Variable Costs	$4		$9
Annual Requirement = 19,000 units

The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations.

Open spreadsheet

Questions

1. Compute the monthly inventory turnover ratio for each of the twelve months. Round your answers to two decimal places.

	Monthly Inventory
Month	Turnover Ratio
January	fill in the blank
February	fill in the blank
March	fill in the blank
April	fill in the blank
May	fill in the blank
June	fill in the blank
July	fill in the blank
August	fill in the blank
September	fill in the blank
October	fill in the blank
November	fill in the blank
December	fill in the blank

2. What is the annual cost of goods sold? Round your answer to the nearest dollar.

$________

3. What is the average inventory for the year? Round your answer to the nearest cent.

$________

4. Compute the annual inventory turnover ratio. Round your answer to two decimal places.

___________

5. What is the break-even point? Round your answer to the nearest whole number.

__________ units

Which option is less expensive, making or buying? Round your answers to the nearest dollar.

The (make or buy) option is less expensive because the total cost for the make option that is $_________ is (less or more) than the total cost for the buy option that is $__________