DSC 101 Study Guide - Ann Lee, Titus Salt, Times New Roman
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Itâs Good, YâAll! is a Texas-based company that operates a largechain of restaurants. The following information is available forthe company (in thousands):
| Category | 2007 | 2008 | 2009 |
|---|---|---|---|
| Net Sales | $400,577 | $517,616 | $640,898 |
| Cost of Goods Sold | $130,885 | $171,708 | $215,071 |
| Net Income | $33,943 | $46,652 | $57,497 |
| Ending Inventory | $23,192 | $28,426 | $41,989 |
Compute the companyâs inventory turnover ratio and age ofinventory for 2007 through 2009. Beginning inventory for 2007 was$15,746,000.
Comment on the ratios computed in Part A. Are there any definitetrends in theses ratios? If so, are these trends favorable orunfavorable? Explain.
Why do decision makers pay close attention to the age of aninventory statistic for companies in the restaurant industry?
looking for some asistance with this problem. I have part of theexcel spreadsheet complete but am unsure how to calculate in excelthe part C of the calculaitons.
Coffee Maker's Incorporated (CMI)
Two divisions of a CMI are involved in a dispute. Division Apurchases Part 101 and Division B purchases Part 201 from a thirddivision, C. Both divisions need the parts for products that theyassemble. The intercompany transactions have remained constant forseveral years.
Recently, outside suppliers have lowered their prices, butDivision C is not lowering its prices. In addition, all divisionmanagers are feeling the pressure to increase profit. Managers ofdivisions A and B would like the flexibility to purchase the partsthey need from external parties to lower cost and increaseprofitability.
The current pattern is that Division A purchases 3,000 units ofproduct part 101 from Division C (the supplying division) andanother 1,000 units from an external supplier. The market price forPart 101 is $900 per unit. Division B purchases 1,000 units of Part201 from Division C and another 500 units from an externalsupplier. Note that both divisions A and B purchase the neededsupplies from both the internal source and an external source atthe same time.
The managers for divisions A and B are preparing a new proposalfor consideration.
Division C will continue to produce Parts 101 and 201. All ofits production will be sold to Divisions A and B. No othercustomers are likely to be found for these products in the shortterm, given that supply is greater than demand in the market.
Division C will manufacture 2,000 units of Part 101 for theDivision A and 500 units of Part 201 for the Division B.
Division A will buy 2,000 units of Part 101 from Division C and2,000 units from an external supplier at $900 per unit.
Division B will buy 500 units of Part 201 from Division C and1,000 units from an external supplier at $1,900 per unit.
Division C Data 2014 Based on the CurrentAgreement
| Part | 101 | 201 |
| Direct materials | $200 | $300 |
| Direct labor | $200 | $300 |
| Variable overhead | $300 | $600 |
| Transfer price | $1,000 | $2,000 |
| Annual volume | 3,000 units | 1,000 units |
Required:
Computations (use Excel)
Set up a table similar the one below to compute the differencebetween the current situation and the proposal for Divisions A andB. Design a different table for Division C.
| DivisionA | ||||||
| Current Situation | Proposal | |||||
| No. of Units | Purchase Price | Total Purchases | No. of Units | Purchase Price | Total Purchases | |
| Internal purchases | 3,000 | $ | 2,000 | $ | ||
| External purchases | 1,000 | 2,000 | ||||
| Total cost for part 101 | $ | $ | ||||
| Savings to Div. A | $ | |||||
Summarize the financial effects for the three divisions and thecompany as a whole in another table.
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