Author Question: Kretzinger Company makes extensive use of financial performance reports for each of its departments. ... (Read 64 times)

notis · **on:** Mar 6, 2021

Question 1

The supply chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers, regardless of whether those activities occur in the same company or in other companies.
◦ true
◦ false

Question 2

Kretzinger Company makes extensive use of financial performance reports for each of its departments. Although most departments have been reporting favorable cost variances with the company's current inventory system, management is concerned about the overall performance of the purchasing department. For example, the following information is for the purchasing of materials for a product the company has been manufacturing for several years:

Purchase Year	Quantity Used	Average Inventory	Price Variance
20X1	40,000	8,000	$ 1,000 F
20X2	60,000	15,000	10,000 F
20X3	60,000	20,000	12,000 F
20X4	50,000	12,500	20,000 U
20X5	54,000	18,000	8,000 F
20X6	58,000	23,200	9,500 F

Required:
a. Compute the inventory turnover for each year. Can any conclusions be drawn for a yearly comparison of the purchase price variance and the inventory turnover?
b. Identify problems likely to be caused by evaluating purchasing only on the basis of the purchase price variance.
c. What recommendations will improve the evaluation process?

covalentbond · **Reply #1 on:** Mar 6, 2021

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