Kumakari is a small furniture store. It has annual sales of $1,800,000. Beginning-of-year inventory (at cost) equals $400,000; ending inventory (at cost) is $270,000. The yearly purchases are $700,000 and transportation charges are $5,700.

The stores most popular item is the Stickley chair. This is one item Kumakari does not want to have out of stock. Kumakari sells 1 Stickley chair every 4 days and wants to keep a safety stock of 3 chairs. The lead time for the chairs is 20 days.

Besides furniture, Kumakari sells handmade rugs from the Middle East. Their number one selling rug is a 12X15 Bakhtiari style rug. Generally, the store sells 50 premium hand knotted Bakhtiari rugs each year (about 1 every 7 days). Kumakari has a 50% mark-up on selling price and sells the Bakhtiari rugs for $2500. It typically costs $500 to place an order for Bakhtiari rugs through a rug broker, and typically the store has a 10% annual carrying cost. Kumakari also has a side business of cleaning and repairing hand knotted rugs. The space utilized for rug cleaning cost them $1,000 per month, labor cost $6,000 per month; plus, it costs them $400 per month for utilities, insurance and other operating expenses.

1 :Calculate Cost of goods sold , Gross profit

2 : Refer to Kumakari Furniture scenario, determine the breakeven point if they charge on average $120 to clean and repair a rug; and, it cost on average $5 for cleaning chemicals and $15 in materials to clean and repair a rug (8 pts)

3:Refer to Kumakari Furniture scenario, determine the EOQ for the Stickley chairs

4:Refer to Kumakari Furniture scenario, determine the reorder point for the Stickley chairs (4 pts.)

5:

In preparing a retail method of accounting worksheet, your accountant has provided you with the following data:

December 1, 20XX - December 31, 20YY

		At Cost	At Retail
Beginning inventory		$ 70,000	$ 164,000
Net purchases		650,000	1,200,000
Additional markups			100,000
Transportation charges		12,000

What is the correct cost complement? (8 pts)

6:Refer to Kumakari Furniture scenario, Kumakari Furnitures expect to see a 10% increase in sales next year. Given its current annual sales, and this year it sold $100,000 worth of furniture in October, the index for October was ________, and the forecast for October next year is ________. (4 pts)