Answer:
a) There is 10.48 weeks of supply last year.
b) There is 9.57 weeks of supply this year.
Explanation:
a) For computing the weeks of supply last year, first we have to compute the average cost of goods sold which equals to
= Cost of goods sold ÷ Total Number of weeks in a year
= $7.55 million ÷ 52 weeks
= 0.145 million
We assume 52 weeks in a year.
Now, we can compute the week supply. The equation is shown below:
= Inventory ÷ Average cost of goods sold
= $1.52 million ÷ 0.145 million
= 10.48 weeks
Thus, there is 10.48 weeks of supply last year.
b) For computing the weeks of supply this year, first we have to compute the average cost of goods sold which equals to
= Cost of goods sold ÷ Total Number of weeks in a year
= $8.62 million ÷ 52 weeks
= 0.165 million
We assume 52 weeks in a year.
Now, we can compute the week supply. The equation is shown below:
= Inventory ÷ Average cost of goods sold
= $1.58 million ÷ 0.165 million
= 9.57 weeks
Thus, there is 9.57 weeks of supply this year.
