Answer:
a. The Weeks of supply is 5.67 week
b. The Inventory turns is 9.167
Explanation:
a. In order to calculate the weeks of supply we would have to use the following formula:
Weeks of Supply = Average Aggregate Inventory Value/Weekly Sales
Average Aggregate Inventory Value = Raw Materials + WIP + Finished Goods = $2,470,000+ $1,566,000 + $1,200,000 = 5,236,000
Sales Per Week = COGS/52 weeks per year = $48,000,000/52 = $923,076
Weeks of Supply = Average Aggregate Inventory Value/Weekly Sales = $5,236,000/$923,076 = 5.67 or 5.7 week
b Inventory Turnover = Annual Sales/Average Aggregate Inventory Value = 48000000/5236000 = 9.167 or 9.17
