On the average, a company has a work-in-process lead time of 10 weeks and

dollar value of the work-in-process? b) If the work-in-process could be reduce

COGS
Company work a week/year
Lead time
Cost of carring inventory
New Lead time
 ad time of 10 weeks and annual cost of goods sold of $32 million. Assuming that the
n-process could be reduced to 6 weeks and the annual cost of carrying inventory was

$ 32,000,000.00
48
10
0.25
6
 of $32 million. Assuming that the company works 48 weeks a year and 5 days a wee
nual cost of carrying inventory was 25% of the WIP inventory value, what would be th

WIP=COGS/# of Weeks yr * New lead time

New WIP=COGS/# of Weeks yr * New lead time
Annual Saving=(OLD WIP - NEW WIP) * Cost of carring Inventory

A) $ 6,666,667
$ 4,000,000
B) $ 666,667
 eeks a year and 5 days a week: a) What is the
ntory value, what would be the annual savings?

arring Inventory
Amalgamated Fenderdenter’s sales are $14 million. The company spends $4.
for purchase of direct materials and $3.8 million for direct labor; and overhea
million. Direct labor and direct material vary directly with sales, but overhead
The company wants to increase its profit by 50%.
a) By how much should the firm increase annual sales?
b) By how much should the firm decrease material cost?
c) By how much should the firm decrease labor cost?
are $14 million. The company spends $4.1 million
$3.8 million for direct labor; and overhead is $4.0
rial vary directly with sales, but overhead does not.
rofit by 50%.
ease annual sales?
rease material cost?
rease labor cost?

A)

B)
C)
Sales $ 14,000,000.00
DM $ 4,100,000.00
DL $ 3,800,000.00
OH $ 4,000,000.00
COGS $ 11,900,000.00
G.P $ 2,100,000.00

% Increase in proft 50%

T. GP $ 3,150,000.00
T.Sales $ 16,409,836.07
Incresuse in Sales $ 2,409,836.07

Requiered Material Cost $ 3,050,000.00

Decrease material cost $ 1,050,000.00
Requiered Labor Cost $ 2,750,000.00
Decrease Labor cost $ 1,050,000.00
% of Sales

29%
27%
29%
85%

22%
8%
20%
8%
Based on the 2024 annual report of Apple Inc. (https://s2.q4cdn.com/470004
places.
the cost of carrying inventory is 25% of the average inventory, what is the ann

Fis

Consolidated Income Staement (In

Millions)

Annual Sales $ 391,035

COGS $ 210,352

Average Inventory $ 6,809

Ave. Accts. Rec $ 31,459
Ave. Accts. Pay $ 65,786
Aver Daily Demand $ 576
2.q4cdn.com/470004039/files/doc_earnings/2024/q4/filing/10-Q4-2024-As-Filed.pd
b) How many days of supply does Apple carry in invent
ntory, what is the annual savings if inventory turns increases by 50%? d) What is App

Apple 2024 Annual Report

Fiscl Year Ended December 31, 2024

ent (In

Inventories
Account Rec.
Account Pay
inventory turns increases by 50%
Inventtory Turns
New Inventtory Turns Ratio
AR Turns
AP Turns
Days of Supply
C2C Cycle Time
4/filing/10-Q4-2024-As-Filed.pdf), answer the following questions: a) What is th
upply does Apple carry in inventory on average? Assume Apple operates 365 days a y
creases by 50%? d) What is Apple’s Cash-to-Cash cycle time in days? Round your ans

24

Consolidated Blance Sheet

2023 2024
$ 6,331 $ 7,286
$ 29,508 $ 33,410
$ 62,611 $ 68,960
50%
30.90
46.34
12.43
3.20
11.81
-76.91
tions: a) What is the inventory turns ratio? Round your answer to 2 decimal
le operates 365 days a year and round your answer to 1 decimal place. c) If
n days? Round your answer to 1 decimal place.

AR Turns = Ann Sales / Ave. Accounts Rec.

AP Turns = Ann Sales / Ave. Accounts Pay.
AP Turns = (COGS) / Average Accs. Pay.
Inv. Turn. Ratio = (COGS)​/ Average Inventory

Average Inventory = Beginning Inventory+Ending Inventory/2

ry turns ratio? Round your answer to 2 decimal
ound your answer to 1 decimal place. c) If
decimal place.

ve. Accounts Rec.

ve. Accounts Pay.
age Accs. Pay.
/ Average Inventory

ginning Inventory+Ending Inventory/2

Assume the following transactions have occurred regarding a specific SKU in 2
Ending inventory in 2023 of 105 units valued at $1,175.

• January 15, purchased 995 units at $12.00 per unit

• January 31, sold 450 units at $15.50 per unit
• February 19, sold 120 units at $15.50 per unit
• March 3, purchased 500 units at $13.00 per unit
• March 25, sold 500 units at $16.00 per unit
• April 16, sold 250 units at $16.50 per unit
• May 20, sold 80 units at $17.00 per unit
• June 6, purchased 1000 units at $13.50 per unit
• July 13, sold 800 units at $16.00 per unit
• August 25, purchased 1200 units at $14.00 per unit
• October 17, sold 950 units at $17.00 per unit

Determine the ending inventory and cost of goods sold using the three metho

Date Lot Purchase U. Cost T. Cost

105 11.19 1174.95
15-Jan 1 995 12 11940
3-Mar 2 500 13 6500
6-Jun 3 1000 13 13000
25-Aug 4 1200 14 16800
3695 49415

Date Lot Sold U. Cost T. Cost

31-Jan 450 15.50 6975
19-Feb 120 15.50 1860
25-Mar 500 16.00 8000
16-Apr 250 16.00 4000
20-May 80 17.00 1360
13-Jul 800 16.00 12800
17-Oct 950 17.00 16150
3150 51145
g a specific SKU in 2024:

t
unit

nit

er unit

ng the three methods of inventory valuation: FIFO, LIFO, and weighted average meth

Purchase
Date QTY
Inv. On Hand 105
15-Jan 995 995
31-Jan

19-Feb 120

3-Mar 500 500

 25-Mar 500
16-Apr 250
20-May 80
6-Jun 1000 1000
Ju 13 800

25-Aug 1200 1200

17-Oct 950

FIFO Method
Purchase
Date QTY
Inv. On Hand 105
1-Jan 995 995
31-Jan 450

19-Feb 120

3-Mar 500 500

 25-Mar 500
16-Apr 250
20-May 80

6-Jun 1000 1000

Ju 13 800

25-Aug 950 1200

9100
8415

Weighted
Average 8757.475
eighted average method.

FIFO Method
Purchase Sold
U. Cost T. Cost QTY U. Cost

12.00 11940
105 11.19
345 12
120 12

13 6500
 500 12
250 13
80 13
13 13000
200 13
600 13
14 16800

400 13
550 14
COGS

Sold
U. Cost T. Cost QTY U. Cost

12 11940
450 12

120 12

500 13 6500
 500 13
250 12
80 12

13 13000
800 13

14 16800
950 14

COGS
d Blance
T. Cost Qty U. Cost
105 11.19
995 12
1175
4140 650 12
1440
530 12
530 12
 500 13
6000 530 13
3250 280 13
1040 200 13
1000 13
2600
7800 400 13
400 13
1200 14
5200
7700 650 14
40315

Blance
T. Cost Qty # Unit
105 11.19
995 12
5400 105 11.19
545 12
1440 105 11.19
425 12
105 11.19
 425 12
500 13
6500 105 11.19
3000 175 12
960 105 11.19
95 12
1000 13
10400 105 11.19
95 12
200 13
1200 14
13300.00 105 11.19
95 12
200 13
250 14
41000
nce
T. Cost
1175
11940

7800

6360
6360
 6500
6890
3640
2600
13000

5200
5200
16800

9100

T. Cost
1175
11940
1175
6540
1175
5100
1175
 5100
6500
1175
2100
1175
1140
13000
1175
1140
2600
16800
1175
1140
2600
3500
8415
Ending inventory in 2023 of 105 units valued at $1,175.

• January 15, purchased 995 units at $12.00 per unit

• January 31, sold 450 units at $15.50 per unit
• February 19, sold 120 units at $15.50 per unit
• March 3, purchased 500 units at $13.00 per unit
• March 25, sold 500 units at $16.00 per unit
• April 16, sold 250 units at $16.50 per unit
• May 20, sold 80 units at $17.00 per unit
• June 6, purchased 1000 units at $13.50 per unit
• July 13, sold 800 units at $16.00 per unit
• August 25, purchased 1200 units at $14.00 per unit
• October 17, sold 950 units at $17.00 per unit

Determine the ending inventory and cost of goods sold using the three metho

Purchase
Date QTY
Inv. On Hand
15-Jan 995

31-Jan

19-Feb
 3-Mar 500
25-Mar

16-Apr

20-May

6-Jun 1000

13-Jul
25-Aug 1200
17-Oct
 per unit

unit
er unit
t

r unit

per unit

using the three methods of inventory valuation: FIFO, LIFO, and weighted average me

FIFO Method
Purchase Sold
U. Cost T. Cost QTY U. Cost T. Cost

16 15920

105 11.19 1175

345 12 4140

140 12 1680
 13 6500
500 12 6000

30 12 360
220 13 2860
80 13 1040

13.5 13500

200 13 2600
14 16800 600 13.5 8100
400 13.5 5400
550 14 7700
COGS 41055
ghted average method.

Blance
Qty U. Cost T. Cost
105 11.19 1175
995 12 11940
105 11.19 1175
995 12 11940

650 12 7800
650 12 7800
 530 12 6360
500 13 6500
30 12 360
500 13 6500

280 13 3640

200 13 2600
200 13 2600
1000 13.5 13500
400 13.5 5400
1200 14 16800

650 14 9100

9100
Z

FIFO Results:

COGS = $41,055
Ending Inventory = $9,100
 Purcahse
Data Activites U
1-May 20
5-May 5 6
13-May 22

20-May 7 7
24-May 5 5
31-May 13
 Purcahse Sold
$ Am U $ Am

3.5 21.0
20 3 60.0
2 3.5 7.0

3.6 24.8
3.7 18.5
3 3.5 10.5
7 3.6 25.2
3 3.7 11.1

Sales 279.65
COGS 113.8
 Balance
U $ Am
20 3 60
5 3.5 17.5

3 3.5 10.5
7 3.6 24.8
5 3.7 18.5

3 3.7 11.1
Date Lot Purchase U. Cost
15-Jan 1 995 13.00
3-Mar 2 500 13.00
6-Jun 3 1000 13.00
25-Aug 4 1200 14.00
3695

Date Lot Sold U. Cost

31-Jan 450 15.50
19-Feb 120 15.50
25-Mar 500 16.00
16-Apr 250 16.00
20-May 80 17.00
13-Jul 800 16.00
17-Oct 950 17.00
3150
 Purchase
T. Cost Date Avtive QTY
11940 Inv. On Hand
6500 15-Jan
13000
16800 31-Jan
48240

T. Cost 19-Feb 120

6975
1860 3-Mar 500 500
8000
4000 25-Mar 500
1360
12800 16-Apr 250
16150
20-May 80

6-Jun 1000 1000

Ju 13 800

25-Aug 1200 1200

 17-Oct 950

Purchase
Date QTY
Inv. On Hand 105
1-Jan 995 995

31-Jan 450

19-Feb 120

3-Mar 500 500

25-Mar 500

16-Apr 250
20-May 80

6-Jun 1000 1000

Ju 13 800

25-Aug 1200 1200

17-Oct 950
 FIFO Method
Purchase Sold Blance
U. Cost T. Cost QTY U. Cost T. Cost Qty

12 4140.00
650
120 12 1440.00
530
13 6500 530
500
500 12 6000.00
530
250 13 3250.00
280
80 13 1040.00
200
13 13000 200
1000
200 13 2600.00
600 13 7800.00
400
14 16800 400
1200
 400 13 5200.00
550 14 7700.00
650
COGS 40419.5

FIFO Method
Purchase Sold Blance
U. Cost T. Cost QTY U. Cost T. Cost Qty
105
12 11940 995

450 12 5400.00 105

545

120 12 1440.00 105

425
13 6500 105
425
500
500 13 6500.00 105
425
250 12 3000.00 105
175
 80 12 960.00 105
95
13 13000 105
95
1000
800 13 10400.00 105
95
200
14 16800 105
95
200
1200
950 14 13300.00 105
95
200
250

COGS 41000

9100
8415

Weighted
Average 8757.5
 Blance
# Unit T. Cost
11.19 1175
12 11940

12 7800

12 6360
12 6360
13 6500

13 6890

13 3640

13 2600
13 2600
13 13000

13 5200
13 5200
14 16800
 14 9100

Blance
# Unit T. Cost
11.19 1175
12 11940

11.19 1175
12 6540

11.19 1175
12 5100
11.19 1175
12 5100
13 6500
11.19 1175
12 5100
11.19 1175
12 2100
11.19 1175
12 1140
11.19 1175
12 1140
13 13000
11.19 1175
12 1140
13 2600
11.19 1175
12 1140
13 2600
14 16800
11.19 1175
12 1140
13 2600
14 3500
8415