1 The tomahawk motorcycle company manufactures motorcycles L

1. The tomahawk motorcycle company manufactures motorcycles. Last year the cost of goods sold was $425 million. The company had the following average value of production materials and and finished goods. $4,629,000 $ 17, 465,000 $12,322,000 Production materials and parts Work-In-Process Finished Goods The company CEO is interested to know the number of inventory turns and days of supply being held in inventory. Calculate these metrics

Solution

Total inventory in the system , $

= Production materials and parts + Work in process + Finished goods

= 4629,000 + 17465,000 + 12322,000

= $ 34416000

Cost of goods sold = $425,000000

Number of Inventory turns = Cost of goods sold/ Total inventory in the system = 425,000000/ 34,416000 = 12.348

We define,

Days of supply = (Total inventory in the system / Cost of goods sold ) x 365 = (34,416000/425,000000 ) x 365 = 29.55 days

INVENTORY TURNS = 12.348

DAYS OF SUPPLY = 29.55 DAYS

INVENTORY TURNS = 12.348

DAYS OF SUPPLY = 29.55 DAYS