The McDonald\'s fast-food restaurant on campus sells an average of 4,000 quarter

Question

The McDonald's fast-food restaurant on campus sells an average of 4,000 quarter-pound hamburgers each week. Hamburger patties are resupplied twice a week, and on average the store has 350 pounds of hamburger in stock. Assume that the hamburger patties cost $1.00 a pound and there are 52 weeks in a year. a. What is the inventory turnover for the hamburger patties? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Inventory turnover b. On average, how many days of supply are on hand? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Average days of supply per year

Explanation / Answer

Average sales = 4000 quarter-pound per week or 4000/4 = 1000 pound per week

Cost = $1 per pettie

Average inventory = 350 pounds

Number of weeks per year = 52

So cost of goods sold = Average sales per week x cost x number of weeks per year = 1000x$1x52 = $52000

a) Inventory turnover = cost of goods sold / Average inventory

= $52000/350 = 148.57 per year

b) Average days of supply = (Average inventory / cost of goods sold) 52 weeks

= (350/52000)52

= 0.35 weeks

= 2.45 days (0.35 x 7 days per week = 2.45)

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