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lapo4ka [179]
3 years ago
6

Your firm's last three years of sales have been $1 million, $2 million, and $3 million (oldest to most recent). Year-end invento

ry was $250k, $500k, and $750k respectively. You are considering purchasing an inventory system that will double your inventory turnover. Which of the following is a good estimate for the amount you'll save with regard to inventory investment next year, assuming your sales will be $4 million - i.e., what's the difference between your estimates of inventory with the system and without? (Assume that your costs of goods sold stay at a constant percentage of sales throughout the past three years and next year; use same-year CoGS/Inv as your inventory turnover formula.)
Business
1 answer:
Nitella [24]3 years ago
6 0

Answer:

we will save 500,000 dollars worth of inventory.

Explanation:

If sales are 4,000,000 then the expected inventory will be 1,000,000

Giving an inventory turnover of:

4,000,000 / 1,000,000 = 4

IF we double the inventory turnover then:

4,000,000/inventory = 8

So the inventory will be of: 4,000,000/8 = 500,000

the difference is for 500,000

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Answer:

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While managerial accounting is the aspect of accounting that is concerned with the identification, measurement, analysis, and interpretation of accounting information to help managers plan for the future, make decisions for the company, and determine if their plans and decisions were accurate and efficient.

1. Helps Creditors make lending decisions is related Financial Accounting.

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