/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Problem 10 What are three different types o... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 2: Problem 10

What are three different types of inventory that manufacturing companies hold?

Short Answer

Expert verified
The three different types of inventory that manufacturing companies hold are Raw Materials, Work-In-Process (WIP) Inventory, and Finished Goods Inventory. Raw Materials are unprocessed materials used in the manufacturing process, such as metal, wood, or plastic. Work-In-Process Inventory refers to partially completed goods that are still in the production process, for example, bicycle frames that have been assembled but not yet painted. Finished Goods Inventory consists of completed products ready for sale or distribution, like assembled and painted bicycles that have passed quality checks.

Step by step solution

01

Identify the first type of inventory

The first type of inventory that manufacturing companies hold is Raw Materials. These are the unprocessed materials used in the manufacturing process to create finished products. Examples of raw materials include metal, wood, and plastic.
02

Identify the second type of inventory

The second type of inventory that manufacturing companies hold is Work-In-Process (WIP) Inventory. This refers to partially completed goods that are still in the production process. They are not yet ready for sale, but they are no longer considered raw materials. For example, if a company is manufacturing bicycles, then the bicycle frames that have been assembled but not yet painted can be considered as work-in-process inventory.
03

Identify the third type of inventory

The third type of inventory that manufacturing companies hold is Finished Goods Inventory. These are completed products ready to be sold or distributed to customers. These items have gone through the entire manufacturing process and have met quality standards. Using the bicycle example, a finished bicycle that has been assembled, painted, and passed quality checks would be considered as a finished good inventory.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Raw Materials
In the world of manufacturing, raw materials are the building blocks. They are the beginning stage of the production journey. Think of raw materials as the unprocessed substances that, through creativity and manufacturing magic, transform into something entirely new. For instance, a furniture manufacturer might use wood, metal, and fabric as raw materials.
Raw materials are crucial for any manufacturing business because they kick-start the production. Without them, there would be nothing to shape, carve, or mold. The importance of managing these materials efficiently cannot be understated. Reasons include:
  • Ensuring consistent production flow
  • Reducing wasted materials
  • Minimizing cost overruns
Remember, like a chef starting a dish, manufacturers start with raw ingredients.
Work-In-Process Inventory
After raw materials enter the production line, they become part of what is known as Work-In-Process (WIP) Inventory. These are materials in transition, toys-in-the-making, if you will. During this stage, the materials are being worked on but are not yet ready to hit the shelves.
Let's consider a car manufacturing plant; initially, you have metal sheets and engine parts as raw materials. Once assembled into a partially constructed vehicle, it transitions into WIP inventory. At this stage, oversight is critical, as it ensures production runs smoothly, and:
  • Helps monitor the progress
  • Prevents production delays
  • Optimizes work efficiency
Work-In-Process is about transformation, gradually moving everyday materials closer to the final, sellable product.
Finished Goods Inventory
Finally, every manufacturing process aims to convert raw materials and WIP into Finished Goods Inventory. These are complete products waiting patiently to be bought. They tick all the boxes, having been through rigorous quality checks, and stand ready for consumer use.
Imagine a toy factory. The finished goods inventory houses action figures that have gone from plastic pellets to fully formed superheroes. Keeping a balanced finished goods inventory is vital for any business because:
  • It ensures timely order fulfillment
  • Maintains revenue flow
  • Provides immediate sale opportunities
In essence, finished goods are the stars of the manufacturing show, ready to serve consumers and bring joy to end-users.

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Define variable cost and fixed cost. Give an example of each.

Variable costs, fixed costs, total costs. Bridget Ashton is getting ready to open a small restaurantt She is on a tight budget and must choose between the following long-distance phone plans: Plan A: Pay 10 cents per minute of long-distance calling Plan B: Pay a fixed monthly fee of \$15 for up to 240 long-distance minutes and 8 cents per minute thereafter (if she uses fewer than 240 minutes in any month, she still pays S15 for the month) Plan C: Pay a fixed monthly fee of \$22 for up to 510 long- distance minutes and 5 cents per minute thereafter (i she uses fewer than 510 minutes, she still pays \(\$ 22\) for the month). 1\. Draw a graph of the total monthly costs of the three plans for differentlevels of monthly long-distance calling. 2\. Which plan should Ashton choose if she expects to make 100 minutes of long-distance calls? 240 minutes? 540 minutes?

Define product cost. Describe three different purposes for computing product costs.

Computing and interpreting manufacturing unit costs. Minnesota Office Products (MOP) produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at the plant. It currently uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labor, and manufacturing overhead costs. Total manufacturing overhead costs of the plant in July 2017 are \(\$ 150\) million (\$15 million of which are fixed). This total amount is allocated to each product line on the basis of the direct manufacturing labor costs of each line. Summary data (in millions) for July 2017 are as follows: $$\begin{array}{lccc} & \text { Supreme } & \text { Deluxe } & \text { Regular } \\ \hline \text { Direct material costs } & \$ 89 & \$ 57 & \$ 60 \\ \text { Direct manufacturing labor costs } & \$ 16 & \$ 26 & \$ 8 \\ \text { Manufacturing overhead costs } & \$ 48 & \$ 78 & \$ 24 \\ \text { Units produced } & 125 & 150 & 140 \end{array}$$ 1\. Compute the manufacturing cost per unit for each product produced in July 2017 . 2\. Suppose that, in August 2017 , production was 150 million units of Supreme, 190 million units of Deluxe, and 220 million units of Regular. Why might the July 2017 information on manufacturing cost per unit be misleading when predicting total manufacturing costs in August \(2017 ?\)

Classification of costs, service sector. Market Focus is a marketing research firm that organizes fo cus groups for consumer-product companies. Each focus group has eight individuals who are paid \(\$ 60\) per session to provide comments on new products. These focus groups meet in hotels and are led by a trained independent marketing specialist hired by Market Focus. Each specialistis paid a fixed retainer to conductt a minimum number of sessions and a per session fee of \(\$ 2,200\). A Market Focus staff member attends each session to ensure that all the logistical aspects run smoothly. Classify each cost item (A-H) as follows: a. Direct or indirect (D o r I) costs of each individual focus group b. Variable or fixed (V or F) costs of how the total costs of Market Focus change as the number of focus groups conducted changes. (If in doubt, select on the basis of whether the total costs will change sub stantially if there is a large change in the number of groups conducted. You will have two answers (D or l; V or F) for each of the following items: Cost Item. A. Payment to individuals in each focus group to provide comments on new products. B. Annual subscription of Market Focus to Consumer Reports magazine. C. Phone calls made by Market Focus staff member to confirm individuals will attend a focus group session (Records of individual calls are not kept.) D. Retainer paid to focus group leader to conduct 18 focus groups per year on new medical products. E. Recruiting cost to hire marketing specialists. F. Lease payment by Market Focus for corporate office. G. cost of tapes used to record comments made by individuals in a focus group session (These tapes are sent to the company whose products are being tested.) H. Gasoline costs of Market Focus staff for company-owned vehicles (Staff members submit monthly bills with no mileage breakdowns.) I. costs incurred to improve the design of focus groups to make them more effective.
See all solutions

Recommended explanations on Math Textbooks

Logic and Functions

Read Explanation

Calculus

Read Explanation

Statistics

Read Explanation

Applied Mathematics

Read Explanation

Discrete Mathematics

Read Explanation

Geometry

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.