Question: A manufacturing company producing medical devices reported $60,000,000 in sales over the last year. Atthe end of the same year, the company had $20,000,000 worth of inventory of ready-to-ship devices.
1.) Assuming that the units in inventory are valued (based on COGS) at $1,000 per unit and are sold for $2,000 per unit, how fast does the company turn its inventory? The company uses a 25 percent per year cost of inventory. That is, for the hypothetical case that one unit of $1,000 would sit for exactly one year, the company charges its operations division a $250 inventory cost.
2.) What is the per unit inventory cost for a product that costs $1,000?