Concept explainers
BURT’S BEES, Durham, North Carolina
Burt’s Bees describes itself as an “Earth-Friendly, Natural Personal Care Company” that produces products for health, beauty, and personal hygiene. The company manufactures over 150 products distributed in nearly 30,000 retail outlets worldwide. As a merchandising company, Burt’s Bees follows its inventory closely. This requires monitoring the receipt, production, purchasing, and planning of inventory. At the end of each time period, Burt’s Bees must make
- 1. What type of inventory system do you think Burt’s Bees uses? Why?
- 2. Using the inventory system you selected in no. 1, what is an example of the type of
journal entry Burt’s Bees would make when purchasing merchandise on account? - 3. Using the inventory system you selected in no. 1, what journal entry would Burt’s Bees use to record the sale of merchandise on account?
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Chapter 11 Solutions
College Accounting (Book Only): A Career Approach
- Lesters Rentals is located in Cincinnati, Ohio. The company rents party equipment such as tents, tables, chairs, linens, and china for small occasions and large weddings. They also rent a variety of home improvement tools and contractor equipment including generators, grinders, power hammers, and drills. The company serves approximately 5,000 repeat customers and has more than 1,200 different inventory items for rent in stock. Lesters purchases replacement stock from 45 different vendors. Each vendor supplies different items, but Lestors may purchase the same item from different vendors. Other business rules include (1) each inventory type has multiple quantities on hand (2) customers use their telephone numbers to uniquely identify themselves for rentals; (3) customers may rent more than one item of the same type. Required Create a normalized data model for Lesters Rentals. Include the primary keys, data attributes, and foreign keys.arrow_forwardHeavenly Chocolates manufactures and sells quality chocolate products at its plant and retail store located in Saratoga Springs, New York. Two years ago, the company developed a web site and began selling its products over the Internet. Web-site sales have exceeded the company’s expectations, and management is now considering strategies to increase sales even further. To learn more about the web-site customers, a sample of 50 Heavenly Chocolate transactions was selected from the previous month’s sales. Data showing the day of the week each transaction was made, the type of browser the customer used, the time spent on the web site, the number of web pages viewed, and the amount spent by each of the 50 customers are contained in the file named Heavenly Chocolates. A portion of the data is shown in the table that follows: Heavenly Chocolates would like to use the sample data to determine whether online shoppers who spend more time and view more pages also spend more money during their visit to the web site. The company would also like to investigate the effect that the day of the week and the type of browser have on sales. Managerial Report Use the methods of descriptive statistics to learn about the customers who visit the Heavenly Chocolates web site. Include the following in your report. Graphical and numerical summaries for the length of time the shopper spends on the web site, the number of pages viewed, and the mean amount spent per transaction. Discuss what you learn about Heavenly Chocolates’ online shoppers from these numerical summaries. Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each day of week. Discuss the observations you can make about Heavenly Chocolates’ business based on the day of the week? Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each type of browser. Discuss the observations you can make about Heavenly Chocolates’ business based on the type of browser? Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the time spent on the web site and the dollar amount spent. Use the horizontal axis for the time spent on the web site. Discuss your findings. Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the number of web pages viewed and the amount spent. Use the horizontal axis for the number of web pages viewed. Discuss your findings. Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the time spent on the web site and the number of pages viewed. Use the horizontal axis to represent the number of pages viewed. Discuss your findings.arrow_forwardFor each of the activities listed, choose the manufacturing concept that applies: (i) just-in-time inventory, (ii) continuous improvement, or (iii) total quality management. A company receives inventory daily based on customer orders. Manufacturing factories have been arranged in such a fashion to reduce inefficiencies. Companies organize customer focus groups in order to look at customer needs and expectations. The entire production process is standardized and written down with procedures. Each customer receives a survey of satisfaction with their product. All orders are complete and shipped within three business days.arrow_forward
- The A-to-Z Office Supply Company Christine Yamaguchi is the manager of the A-to-Z Office Supply Company in Charlotte. The company attempts to gain an advantage over its competitors by providing quality customer service, which includes prompt delivery of orders by truck or van and always being able to meet customer demand from its stock. To achieve this degree of customer service, A-to-Z must stock a large volume of items on a daily basis at a central warehouse and at three retail stores in the city and suburbs. Christine maintains these inventory levels by borrowing cash on a daily basis from the First Piedmont Bank. She estimates that for the coming fiscal year, the company’s demand for cash to pay for inventory will be $17,000 per day for 305 working days. Any money she borrows during the year must be repaid with interest by the end of the year. The annual interest rate currently charged by the bank is 9%. Any time Christine takes out a loan to purchase inventory, the bank charges…arrow_forwardKim Distribution Services (KDS) distributes food purchased in bulk to small retailers. The firm is divided into two divisions: Purchasing and Distribution. Purchasing is responsible for ordering goods from the manufacturer, receiving them, and then moving them to the appropriate location in the warehouse. Distribution is responsible for taking orders from retailers, picking the products from the warehouse for the orders, and packaging the orders for shipment. KDS has a policy of filling every order on the day of the order. If the firm is out of a particular item, it will ship a partial order and complete the order when the item is back in stock. Occasionally, an order will not have to be packaged if the retailer chooses to take delivery at the KDS loading dock. Distribution has 15 employees who are responsible for the activities, and all 15 are trained to handle any of the three tasks. Each of these employees works 40 hours per week for 50 weeks. There is an allowance of 15 percent…arrow_forwardKim Distribution Services (KDS) distributes food purchased in bulk to small retailers. The firm is divided into two divisions: Purchasing and Distribution. Purchasing is responsible for ordering goods from the manufacturer, receiving them, and then moving them to the appropriate location in the warehouse. Distribution is responsible for taking orders from retailers, picking the products from the warehouse for the orders, and packaging the orders for shipment. KDS has a policy of filling every order on the day of the order. If the firm is out of a particular item, it will ship a partial order and complete the order when the item is back in stock. Occasionally, an order will not have to be packaged if the retailer chooses to take delivery at the KDS loading dock. Distribution has 15 employees who are responsible for the activities, and all 15 are trained to handle any of the three tasks. Each of these employees works 40 hours per week for 50 weeks. There is an allowance of 15 percent…arrow_forward
- Boston Retail Company Boston Retail Company (clothing chain) is working with several suppliers of new and second-hand clothes. Store managers have the freedom to decide which supplier(s) they wants to work with and the amount and types of clothes they want to order for their stores in each season. The prices charged by each supplier are based on the price per piece of cloth and the total number of clothes ordered. A store manager first places the order with a supplier. After receiving and accepting the order, the supplier bills the store and the store pays the supplier to have the order delivered. A quality and quantity test is performed when receiving the order. After the test, the employees store and display the clothes in their store. When the clothes have been stored, staff needs to handle (e.g., check, iron, fold) each piece of the clothes so that they are in good shape and conditions. At the end of every season, the store needs to get rid of the clothes that are out of season…arrow_forwardThe Cloth Bonanza sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Cloth Banaza has collected the following information: Annual demand for denim cloth 29,250 yards Ordering cost per purchase order $195 Carrying cost per year 20% of purchase costs Safety-stock requirements None Cost of denim cloth $15 per yard The purchasing lead time is 2 weeks. The Cloth Banaza is open 250 days a year (50 weeks for 5 days a week). 1. Calculate the EOQ for denim cloth.…arrow_forwardHapplia Co. imports household appliances. Each model has many variations and each unit has an identificationnumber. Happlia pays all costs for getting the goods from the port to its central warehouse in Des Moines. Afterrepackaging, the goods are consigned to retailers. A retailer makes a sale, simultaneously buys the appliance fromHapplia, and pays the balance due within one week.To alleviate the overstocking of refrigerators at a Minneapolis retailer, some were reshipped to a Kansas Cityretailer where they were still held in inventory at December 31, 2018. Happlia paid the costs of this reshipment.Happlia uses the specific identification inventory costing method.Required:1. In regard to the specific identification inventory costing method:a. Describe its key elements.b. Discuss why it is appropriate for Happlia to use this method.2. a. What general criteria should Happlia use to determine inventory carrying amounts at December 31, 2018?b. Give four examples of costs included in these…arrow_forward
- Martin Shoes, Inc. manufactures and distributes orthopedic footwear. To sell its products, the marketing department requires sales personnel to call on the shoe retailers within their assigned geographic territories. Each salesperson has a laptop computer, which he or she uses to record sales orders during the day and to send these sales orders to Martin’s network nightly for updating the company’s sales order file. Each day, warehouse personnel review the current sales orders in its file, and where possible, pick the goods and ready them for shipment. (Martin ships goods via common carrier, and shipping terms are generally FOB from the shipping point.) When the shipping department completes a shipment, it also notifies the billing department, which then prepares an invoice for the customer. Payment terms vary by customer, but most are net 30. When the billing department receives a payment, the billing clerk credits the customer’s account and records the cash received. Requirements 1.…arrow_forwardEOQ for a retailer. The Fabric World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Fabric World has collected the following information:arrow_forwardHapplia Co. imports household appliances. Each model has many variations and each unit has an identification number. Happlia pays all costs for getting the goods from the port to its central warehouse in Des Moines. After repackaging, the goods are consigned to retailers. A retailer makes a sale, simultaneously buys the appliance from Happlia, and pays the balance due within one week. To alleviate the overstocking of refrigerators at a Minneapolis retailer, some were reshipped to a Kansas City retailer where they were still held in inventory at December 31, 2016. Happlia paid the costs of this reshipment. Happlia uses the specific identification inventory costing method. Required: 1. In regard to the specific identification inventory costing method: a. Describe its key elements. b. Discuss why it is appropriate for Happlia to use this method. 2. a. What general criteria should Happlia use to determine inventory carrying amounts at December 31, 2016? b. Give four examples of costs…arrow_forward
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