Bambino Sporting Goods makes baseball gloves that are very popular in the spring
ID: 2693440 • Letter: B
Question
Bambino Sporting Goods makes baseball gloves that are very popular in the spring and early summer season. Units sold are anticipated as follows: March 3,600 April 7,600 May 12,200 June 10,200 ________________________________________ 33,600 ________________________________________________________________________________ ________________________________________ 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 33,600 units over four months at a level of 8,400 per month. (a) What is the ending inventory at the end of each month? (Leave no cells blank - be certain to enter "0" wherever required.) Ending inventory March April May June ________________________________________ (b) If the inventory costs $20 per unit and will be financed at the bank at a cost of 6 percent, what is the monthly financing cost and the total for the four months? (Use 0.5 percent as the monthly rate.) (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Inventory financing cost March $ April May June ________________________________________ Total financing cost $ ________________________________________________________________________________ ________________________________________Explanation / Answer
a)
Units Produced
Units Sold
Change in inventory
Ending Inventory
8,400
3,600
+4,800
4,800
April
8,400
7,600
+800
5,600
May
8,400
12,200
–3,800
1,800
June
8,400
10,200
–1,800
0
b)
Ending Inventory
Cost per
Unit ($20)
Inventory Financing Cost(6%)
March
4,800
$96,000
$5760
April
5,600
112,000
6720
May
1,800
36,000
2160
June
0
0
0
Total
12,200
$255,000
$14640
a)
Units Produced
Units Sold
Change in inventory
Ending Inventory
March8,400
3,600
+4,800
4,800
April
8,400
7,600
+800
5,600
May
8,400
12,200
–3,800
1,800
June
8,400
10,200
–1,800
0
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