Professional Simulation In this simulation, you are asked to address questions regarding inventory valuation and measurement.

Prepare responses to all parts.

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KWW Professional Simulation Inventory Valuation Time Remaining 2 hours 0 minutes LUWEQQEL Directions Station Norwel Company makes miniature circuit boards that are components of wireless phones and personal organizers. The company has experienced strong growth, and you are especially interested in how well Norwel is managing its inventory balances. You have collected the following information for the current year. Inventory at the beginning of year Inventory at the end of year, before any adjustments Total cost of goods sold, before any adjustments The company values inventory using the average-cost method. 125.5 million 116.7 million 1,776.4 million Compute Norwel's Inventory tumover for the current year. (See Appendix 5A for the Inventory turnover formula.) Directions Station Use a computer worksheet to prepare a schedule showing the Impact of the following items on Norwer's Inventory tumover. (a) During the year, Norwel recorded sales and costs of goods sold on 2 million of units shipped to various wholesalers on consignment. At year-end, none of these units have been sold by wholesalers. (b) Shipping contracts changed 2 months ago from to.b. shipping point to t.o.b. destination. At the end of the year, 5 million of products are en route to China (and will not arrive until after financial statements are released). Current Inventory balances do not reflect this change In policy. (c) To be more consistent with industry Inventory valuation practices, Norwel changed from average- cost to FIFO for its Inventory of high-speed circuit boards. This inventory is currently carried at 724 million (cost of goods sold, 941 million). Data for this item of inventory for the year are as follows. Month January 1 Units Purchased Inventory Sold Price per Unit Units Balance 100 3.10 100 April 10 150 3.20 250 October 20 130 120 November 20 250 3.50 370 December 15 150 220 Directions Station Measurement Anal Explanation Prepare a brief memorandum to Norwel's management discussing the advantages of adopting the FIFO cost flow assumption.