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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

Assuming that all net sales figures are at retail and all cost of goods sold figures are at cost, calculate the average inventory and inventory turnover for Exercises 8-11. If the actual turnover is below the published rate, calculate the target average inventory necessary to come up to industry standards. Round inventories to the nearest dollar and inventory turnovers to the nearest tenth.

Net Cost of Beginning Ending Average Inventory TargetPublished Average
Sales Goods Sold Inventory Inventory Inventory Turnover Rate Inventory
10. $237,550 $24,670 $43,120 5.9

To determine

To calculate: The average inventory and inventory turnover at retail, assuming that cost of goods sold is $237,550, the beginning inventory is $24,670 and the ending inventory is $43,120 also calculate the target average inventory. Round all inventories to the nearest dollar and inventory turnover to the nearest tenth.

Explanation

Given Information:

Cost of goods sold at retail is $237,550, the Beginning inventory and the ending inventory is $24,670 and $43,120 respectively. Published rate is 5.9.

Formula used:

Average inventory at cost is given by:

Average inventoryat cost=Beginning inventory at cost+Ending inventory at cost2

Inventory turnover at cost is given by:

Inventory turnoverat cost=Cost of goods soldAverage inventory at cost

Target average inventory at cost is given by:

Target average inventory at cost=Cost of goods soldPublished inventory turnover at cost

Calculation:

First, calculate average inventory:

Average inventoryat cost=Beginning inventory at cost+Ending inventory at cost2

Put all values in the above formula

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