Question

Barrington Mills Manufactures denim cloth from two primary raw materials, cotton and dye. Work-in-process includes lapped cotton, spun yarn, and undyed cloth, while finished goods includes three grades of dyed cloth. The average inventory amounts and units costs on hand at any given time are as follow

Raw Materials Inventory Levels Unit Costs
Cotton 70,000 lbs $2.75
Dye 125,000 gal $5.00
Work-in-Process
Lapped Cotton 2,000 rolls $10.50
Spun Yarn 5,000 spools $6.75
Undyed Cloth 500 rolls $26.10
Finished Goods Grade 1 Cloth 250 rolls $65.00
Grade 2 Cloth 190 rolls $80.00 Grade 3 Cloth 310 rolls $105.00The company operates 50 weeks per year and its cost of goods sold for the year was $17.5 million. Determine the company's weeks of supply.

(A) 20.21(B) 19.43(C) 9.09(D) 22.54

Answer 1

weeks of supply 2,7122857

Step-by-step explanation:

17,500,000 / 50 weeks = 350,000 COGS per week

current finished inventory:

250 x $ 65 = 16,250

190 x $ 80 = 15,200

310 x $ 105 = 32,550

Total 64,000

cost added:

70,000 materials x $ 2.75

125,000 materials x $ 5.00

total 817500

WIP:

2,000 rolls x $ 10.50

5,000 spools x $ 6.75

500 rolls x $ 26.10

total $ 67,800

Total inventory: 817,500 + 67,800 + 64,000 = 949300

week of supply:

inventory of 949300

and 350,000 goods are consumer per week

week: 2,7122857