Companies A,B,C,and D Are Competitors in the Same Industry Which Company Has the Best Raw Materials Inventory Turnover?
A)

question 30

Multiple Choice

Companies A,B,C,and D are competitors in the same industry.Assume that all have adequate quantities of raw materials to meet production needs.
$\begin{array}{lccccc}&\text { Company} &\text { Company} &\text { Company} &\text { Company} &\text { Company} \\&\text { AA}&\text { BB}&\text { CC}&\text { DD}&\text { EE}\\\begin{array}{l}\text { Raw materials used in a } \\\text { year }\end{array} & \$ 10,000 & \$ 20,000 & \$ 30,000 & \$ 30,000&\$40,000 \\\begin{array}{l}\text { Beginning raw materials } \\\text { inventory }\end{array} & \$ 700 & \$ 600 & \$ 500 & \$ 40&\$8000 \\ \begin{array}{l}\text { Ending raw materials } \\\text { inventory }\end{array} & \$ 1,100 & \$ 1,000 & \$ 900 & \$ 800&\$1,000 \\\end{array}$
Which company has the best raw materials inventory turnover?

• A) Company A
• B) Company B
• C) Company C
• D) Company D
• E) Company E

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Definitions:

Machine Hours

A measure of production output or activity based on the cumulative hours that machines are operational.

Factory Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and management salaries.

Machine Hours

A measure of the actual time a machine is operated, used in calculating manufacturing costs and setting factory overhead rates.

Overapplied Amount

This is an accounting term referring to a situation where the actual manufacturing overhead cost is less than the overhead cost applied to production, resulting in a surplus.