In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicole's Getaway Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system. On December 31, NGS purchased 10 units at a total cost of $7.10 per unit. Nicole purchased 50 more units at $8.70 in February. In March, Nicole purchased 20 units at $10.70 per unit. In May, 60 units were purchased at $10.50 per unit. In June, NGS sold 60 units at a selling price of $12.70 per unit and 50 units at $10.70 per unit.
In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicole's Getaway Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system. On December 31, NGS purchased 10 units at a total cost of $7.10 per unit. Nicole purchased 50 more units at $8.70 in February. In March, Nicole purchased 20 units at $10.70 per unit. In May, 60 units were purchased at $10.50 per unit. In June, NGS sold 60 units at a selling price of $12.70 per unit and 50 units at $10.70 per unit.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...
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