Days of supply calculation , Accounting Basics

Assignment Help:

Using the data from the Dell Computer annual report 

determine  how  Dell  calculated  the  four  days'  supply  of  raw  materials.  Do   you think four days'supply is a valid representation of the amount of raw material Dell has on hand at the end of the year? Why or why not?       

Net revenue (fiscal year 2005)                                                                    $49,205

Cost of revenue (fiscal year 2005)                                                              $40,190

Production materials on hand (28 January 2005)                                     $228

Work-in-process and finished goods on hand (28 January 2005)         $231

Days of supply in inventory                                                    4day

 

Solution

Days of supply calculation = ($228+$231/$40190)*365days  = 4.17 days 

Dell effectively utilizes just in time. They have revolutionized the selling of personal computers using a direct-business model whose fundamental tenets include taking orders directly from customers, thereby reducing inventory and streamlining distribution .After Dell has received a customer order, they then begin production of the product that the customer desires. A pull system is reactive whereby production is executed in response to a customer order. Customer receives the order in maximum 4 days and at a competitive price by following the supply chain operations. It is a powerful approach to production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. 


Related Discussions:- Days of supply calculation

At the end of the current year, At the end of the current year, $19,900 of ...

At the end of the current year, $19,900 of fees have been earned but not billed to clients. • a. What is the adjustment to record the accrued fees? Indicate each account affecte

Example of accumulated depreciation account, Q. Example of Accumulated Depr...

Q. Example of Accumulated Depreciation account? Along with other items the trial balance of Korman Company for 2010 December 31 includes the following account balances

State the list of special journals, State the list of Special journals ...

State the list of Special journals Purchases - All credit purchases of merchandise Cash Payments - All payments of cash Sales - All credit sales of merchandise

Interest calculations, Calculate the amount of interest for each of the f...

Calculate the amount of interest for each of the following independent situations (assume 365 days per year):             a)

How to do a trial balance, How to do a trial Balance       ...

How to do a trial Balance                     Particulars                            Amount Dr.                       Amount Cr. In

Suppose you want to have $5, Suppose you want to have $5,000 saved at the e...

Suppose you want to have $5,000 saved at the end of five years. The bank will pay you 2% interest on your money. How much would you have to deposit today to have the $5,000 you w

Explain about percentage of completion method, Q. Explain about Percentage ...

Q. Explain about Percentage of completion method? The percentage-of-completion method makes out revenue based on the estimated stage of completion of a long-term project. To ca

Profit and loss account concepts, PROFIT AND LOSS ACCOUNT CONCEPTS: The...

PROFIT AND LOSS ACCOUNT CONCEPTS: The initial point in accepting the profit and loss account is to be clear about the Significance of "profit". Profit is the return for taki

What do you recognize by intercompany settlement, A key functional area of ...

A key functional area of SAP for Utilities that supports cross-company exchange of settlement data based on international standards like as EDI, XML, and Microsoft Excel. Interc

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd