Review the chapters opening feature highlighting the Dame brothers (Brooks, Taylor, and Tanner) and their company, Proof

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Review the chapter’s opening feature highlighting the Dame brothers (Brooks, Taylor, and Tanner) and their company, Proof Eyewear. Assume that Proof Eyewear consistently maintains an inventory level of $30,000, meaning that its average and ending inventory levels are the same. Also assume its annual cost of sales is $120,000. To cut costs, the Dame brothers propose to slash inventory to a constant level of $15,000 with no impact on cost of sales. They plan to work with suppliers to get quicker deliveries and to order smaller quantities more often.


Required

1. Compute the company’s inventory turnover and its days’ sales in inventory under

(a) Current conditions

(b) Proposed conditions.

2. Evaluate and comment on the merits of their proposal given your analysis for part 1. Identify any concerns you might have about the proposal.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
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Fundamental Accounting Principles

ISBN: 978-0077862275

22nd edition

Authors: John Wild, Ken Shaw, Barbara Chiappetta

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