Cold Rock, an ice cream store in central Illinois, sells several varieties of popular ice creams in its neighborhood villages. On the morning of January 01, 2023, the store manager received raw materials such as milk, sugar, several types of dried fruits, and flavoring agents for making ice cream. The manager estimated that she had $9000 worth of inventory of raw materials. There were no prepared ice creams in the store on the morning of January 01, 2023.

On the evening of January 07, 2023, the store manager noticed that they have consumed all the inventory that arrived on January 01, 2023. The store did not receive any replenishment of inventory between the two dates.

Also, the store manager realized that they sold an average of 600 ice creams per day over these 7 days, at an average price of $5 for each ice cream.

Also, apart from the raw material, the manager estimated that she had spent $4000 on salaries of staff members such as servers, and personnel who prepared the ice creams; an additional $1000 for cleaning supplies; $500 on electricity and energy for running the refrigerators and lightings, and $1000 for rental of the premises. Additionally, there were miscellaneous expenses of $500.

The rest of the revenue went toward the profit earned by Cold Rock over these 7 days.

Compute the Cost of Goods Sold (COGS) of the ice creams sold by Cold Rock over the 7 days.

Being a small shop, please consider all the expenses noted as direct expenses for the problem (even though strictly speaking they are not). So, compute COGS as:

COGS = Raw Material Costs + All Personnel Costs (Preparers and Servers) + Cleaning Costs + Energy Costs + Rental Costs + Miscellaneous Costs.

What was the inventory turnover for Cold Stone over the 7 days? 

 

2. How many days of inventory was carried by Cold Rock over the 7-day period in the question? 

 

3. The manager of Cold Rock realized that on Jan 01, 2023, she owed the entire value of the inventory to the suppliers of the materials for making ice creams. However, by the end of the day Jan 07, 2023, she could pay $5000 to the suppliers for the raw material supplies she received on Jan 01, 2023.

Cold Stone paid all other charges on a daily basis and there was no outstanding balance at any point over the 7 days.

Also, on Jan 01, 2023, there were no outstanding receipts from the customers of Cold Stone.

Most Cold Stones customers pay in cash, except one restaurant, Greedy Gourmet, that did not pay for the purchase of ice creams during this period from Cold Stone.

On Jan 07, 2023, Greedy Gourmet owed $3000 to Cold Stone.

Compute the Cash-to-Cash cycle of Cold Stone over the 7 days.

Answer rating: 100% (QA)

To compute the Cost of Goods Sold COGS for Cold Rock over the 7day period well add up all the direct expenses as specified COGS Raw Material Costs All ... View the full answer