Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
Bambino Sporting Goods makes exceptional gloves that sell well in the spring and early summer season
Bambino Sporting Goods makes exceptional gloves that sell well in the spring and early summer season. A projection of units sold is as follows:
March 3,100
April 7,100
May 11,200
June 9,200
Total 30,600
If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup.
The production manager thinks the above assumption is too optimistic and decides to go with level production to avoid being out of merchandise. He will produce the 30,600 items at a level of 7,650 per month.
a. He's interested to know how much extra inventory Bambino will be holding if they go with level production. Compare the units sold to the units produced to calculate the change in inventory by month. Keep track of the cumulative impact of these invetory changes. Complete the table below.. (Do not leave any empty spaces; input a 0 wherever it is required. Enter all values as positive value.)
Bambino Sporting Goods Units
sold Units Change in Cumulative
Units Produced inventory change
March ______ _________ ________ ________
April ______ _________ ________ ________
May ______ _________ ________ ________
June ______ _________ ________ ________
b. Any increase in current assets (like inventory) will be financed through a line of credit Bambino has with a local bank. The Corporate Finance Manager is interested to know how much extra interest he will pay to finance the increase in inventory. The local bank charges 6 percent interest per year for the line of credit. The interest is caluated montly (so take the 6 percent per year and divide by 12) and depends on how much of the line of credit is being used. The invetory has a cost of $12 per unit so the change in the monthly balance outstanding on the line of credit is the cumulative change in invetory times the cost per unit. Complete the table below detailing the monthly financing cost and the total financing cost for the four months. (Do not leave any empty spaces; input a 0 wherever it is required.)
Financing cost
March $___________
April ____________
May ____________
June ____________
Total financing cost $_____________
View CommentsFlag question
Expert Solution
| a) | ||||
| Month | Units Sold | Units produced | Change in inventory | Cumlative Inventory Change |
| A | B | C (B-A) | ||
| March | 3100 | 7650 | 4550 | 4550 |
| April | 7100 | 7650 | 550 | 5100 |
| May | 11200 | 7650 | -3550 | 1550 |
| June | 9200 | 7650 | -1550 | 0 |
| b) Computation of Total Financing Cost: | ||||
| Month | Cumlative Inventory Change | Cost per unit | Change in inventory | Inventory Financing cost |
| A | B | C (A*B) | (C*6%/12) | |
| March | 4550 | $12 | $54,600.00 | $273.00 |
| April | 5100 | $12 | $61,200.00 | $306.00 |
| May | 1550 | $12 | $18,600.00 | $93.00 |
| June | 0 | $12 | $0.00 | $0.00 |
| Total | $672.00 |
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
