The Owner of a Garden Supply Store Was Wondering If

question 32

Essay

The owner of a garden supply store was wondering if they could manage their inventory better. She decided to develop an ABC classification system to help manage the inventory. The company's inventory consists of the following items:
a.Compute the total dollar value of each of the ten inventory items. What is the total value of all the inventory items?
b.Which items should be declared "A" items? What percentage of total inventory value does your "A" group represent? What percentage of the total number of inventory items does your "A" group represent?
c.Which items should be declared "B" items? What percentage of total inventory value does your "B" group represent? What percentage of the total number of inventory items does your "B" group represent?
d.Which items should be declared "C" items? What percentage of total inventory value does your "C" group represent? What percentage of the total number of inventory items does your "C" group represent?

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Definitions:

Fair Value Increments

Adjustments made to the book values of assets or liabilities to reflect their fair value at the time of acquisition in a business combination.

Bargain Purchase

A situation where the purchase price of a company is less than the fair value of its net identifiable assets.

Purchase Consideration

The total value transferred by an acquirer to purchase a company, which can include cash, securities, or other assets.

Fair Value

A measure of the price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.