The following information is the end-of-year data for Pecos Yo Company: Compute the following: 1. Inventory turnover
Question:
Compute the following:
1. Inventory turnover for raw materials inventory
2. Days in raw materials inventory (Assume 360 days in a year.)
3. Inventory turnover for work-in-process inventory
4. Days in work-in-process inventory (Assume 360 days in a year.)
5. Inventory turnover for finished goods inventory
6. Days in finished goods inventory (Assume 360 days in ayear.)
Raw materials purchased during the year. Beginning raw materials Beginning work in-process inventory Ending workin-process inventory Beginning finished goods inventory Ending finished goods inventory $203,000 $ 64,000 60,000 20,000 25,000 350,000 inventory Ending raw materials inventory Applied manufacturing overhead Direct labor costs. . 37,000 40,000 100,000
Step by Step Answer:
1 Inventory turnover for raw materials inventory 88 times Computations Beginning raw materials inventory 20000 Purchases of raw materials 203000 Raw m...View the full answer
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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