The Minnesota Mining and Manufacturing Company (3M) gives the following description of its business: 3M is a diversified technology company with a global presence in the following businesses: industrial and transportation; health care; display and graphics; consumer and office; safety, security and protection services; and electro and communications. 3M is among the leading manufacturers of products for many of the markets it serves. Most 3M products involve expertise in product development, manufacturing and marketing . . .
Familiar 3M products include Scotch tape and the ubiquitous Post-it notes.
Inventory data from 3M's 2009 10-K report are as follows (in millions of U.S. dollars):
______________________________________________________________2009............2008
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,109..........$13,379
Inventories:
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,255.........$ 1,505
Work in process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .815............851
Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569.............657
Total inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,639........$ 3,013
1. Compute cost of goods manufactured for 2009.
2. Compute total manufacturing costs for 2009.
3. Compute number of days' sales in inventory for 2009 (use average inventory).
Make the calculation using:
(a) Total inventory
(b) Finished goods inventory
4. Of the two numbers you computed in (3), which is more meaningful? Explain.