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The Bawl Corporation supplies alloy ball bearings to auto manufacturers in Detroit
The Bawl Corporation supplies alloy ball bearings to auto manufacturers in Detroit. Because of its specialized manufacturing process, considerable work-in-process and raw materials are needed. The current inventory levels are $2,470,000 and $1,566,000, respectively. In addition, finished goods inventory is $1,200,000 and sales (at cost) for the current year are expected to be about 48 million.
Express total inventory as:
a) Weeks of supply
b) Inventory turns
Expert Solution
Work in process inventory = $2470000
Raw materials = $1566000
Finished goods inventory = $1200000
Sales (cost of goods sold) = $48000000
Total average inventory = Work in process + raw materials + finished goods
= 2470000 + 1566000 + 1200000 = $5236000
a. Weeks of supply = (total average inventory/cost of goods sold)*52 weeks
= (5236000/48000000)*52 = 5.67 weeks
b. Inventory turns = cost of goods sold/total average inventory
= 48000000/5236000 = 9.167
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