McMahan, LTD. provided the following data for 2008 and 2009:

Inventory
December 31, 2007	$178,000
December 31, 2008	185,000
December 31, 2009	193,000
Cost of goods sold
2008	$544,000
2009	592,000
Gross margin
2008	$257,000
2009	286,000

Do not round until your final answers. Round all calculations to two decimal places. (a) Calculate the inventory turnover ratio for 2008 and 2009. 2008Answertimes 2009Answertimes (b) Calculate the gross margin return on inventory investment for 2008 and 2009. 2008Answer 2009Answer (c) Which of the following is an indication that McMahan has become more lean in 2009 than in 2008?

For every dollar invested in average inventory it produced more gross margin in 2008 than in 2009.It had a higher inventory turnover in 2009 than in 2008.It had a higher gross margin in 2009 than 2008.Inventory turnover was above the established standard of 3.0 for lean companies.All of the above are signs of having a lean operation.

Tucson Manufacturing Company has five operating departments, two of which are producing departments (P1 and P2) and three of which are service departments (S1, S2, and S3). All costs of the service departments are allocated to the producing departments. The following table shows the distribution of services from the service departments.

S1	--	5%	25%	50%	20%
S2	10%	--	5	45	40
S3	15	5	--	20	60

The direct operating costs of the service departments are as follows:

S1	$ 49,000
S2	93,500
S3	18,000

Using the direct method, prepare a schedule allocating the service department costs to the producing departments.

Do not round while completing your calculations.

Total costs	$Answer	$Answer	$Answer	$Answer	$ Answer

Large retailers like The Home Depot and Wal-Mart typically use gross margin ratio (gross margin sales), inventory turnover (sometimes referred to as inventory turns), and gross margin return on investment (GMROI) to evaluate how well inventory has been managed. The goal is to maximize profits while minimizing the investment in inventory. Below are data for four scenarios, a base scenario (# 1) followed by three modifications (#s 2, 3, & 4) to the base scenario.

Sales	$ 10,000	$ 20,000	$ 12,000	$ 10,000
Cost of goods sold	6,000	12,000	6,000	6,000
Gross profit	$ 4,000	$ 8,000	$ 6,000	$ 4,000
Average inventory	$ 6,000	$ 6,000	$ 6,000	$ 5,000

For each scenario calculate the gross margin percent, the inventory turnover, and GMROI.

Round your answers to one decimal place. (Example for % answers-- 99.9%)

Gross Margin %	Answer	%	Answer	%	Answer	%	Answer	%
Inventory Turnover	Answer		Answer		Answer		Answer
GMROI	Answer	%	Answer	%	Answer	%	Answer	%

Doll Computer manufactures laptop computers under its own brand, but acquires all the components from outside vendors. No computers are assembled until the order is received online from customers, so there is no finished goods inventory. When an order is received, the bill of materials required to fill the order is prepared automatically and sent electronically to the various vendors. All components are received from vendors within three days and the completed order is shipped to the customer immediately when completed, usually on the same day the components are received from vendors. The number of units in process at the end of any day is negligible. The following data are provided for the most recent month of operations:

Actual components costs incurred	$916,000
Actual conversion costs incurred	203,000
Units in process, beginning of month	-0-
Units started in process during the month	6,000
Units in process, end of month	-0-

(a) Assuming Doll uses traditional cost accounting procedures: 1. How much cost was charged to Work-in-Process during the month? $Answer 2. How much cost was charged to cost of goods sold during the month? $Answer (b) Assuming Doll is a lean production company and uses backflush costing method: 1. How much cost was charged to Work-in-Process during the month? $Answer 2. How much cost was charged to cost of goods sold during the month? $Answer

O'Brian's Department Stores allocates the costs of the Personnel and Payroll departments to three retail sales departments, Housewares, Clothing, and Furniture. In addition to providing services to the operating departments, Personnel and Payroll provide services to each other. O'Brian's allocates Personnel Department costs on the basis of the number of employees and Payroll Department costs on the basis of gross payroll. Cost and allocation information for June is as follows:

Direct department cost	$7,300	$3,300	$12,000	$20,000	$15,450
Number of employees	6	3	8	16	4
Gross payroll	$5,600	$2,900	$11,500	$16,900	$8,400

(a) Determine the percentage of total Personnel Department services that was provided to the Payroll Department. (Round your answer to one decimal place.) Answer% (b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department. (Round your answer to one decimal place.) Answer% (c) Prepare a schedule showing Personnel Department and Payroll Department cost allocations to the operating departments, assuming O'Brian's uses the step method.

For each department below, enter thetotal costscalculated from your schedule.

Do not round until your final answers. Roundanswers to the nearest dollar.

Total costs	$Answer	$Answer	$Answer	$Answer	$ Answer