Chapter 16.III, Problem 4RE

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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 the following. If the actual turnover is less than 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.

Cost of |
Beginning |
Ending |
Average |
Inventory |
Published |
Target Average |
||||||||

Net Sales Goods Sold |
Inventory |
Inventory |
Inventory |
Turnover |
Rate |
Inventory |
||||||||

4. | $4,570,000 | $854,000 | $650,300 | _______ | _______ | 8.2 | _______ |

To determine

**To calculate:** The target average inventory if the publish rate is greater than the inventory turnover, average inventory and inventory turnover and round off to nearest tenth when the net sale is $4,570,000 and beginning and ending inventory are provided as $854,000 and $650,300 respectively and the published rate is provided as 8.2.

Explanation

**Given Information:**

The beginning and the ending inventory is provided as $854,000 and $650,300 respectively

The net sale is provided as $4,570,000.

The published inventory turnover is provided as 8.2

**Formula used:**

Average inventory at retail is:

Inventory turnover is:

Target average inventory at retail is:

**Calculation:**

Consider the beginning and ending inventory are provided as $$854,000 and $650,300 respectively.

Now calculate the average inventory using the formula,

Thus,

Therefore, the average inventory is $752,150

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Sect-16.I P-7RESect-16.I P-8RESect-16.I P-9RESect-16.I P-10RESect-16.II P-5TIESect-16.II P-6TIESect-16.II P-1RESect-16.II P-2RESect-16.II P-3RESect-16.II P-4RESect-16.II P-5RESect-16.II P-6RESect-16.II P-7RESect-16.II P-8RESect-16.II P-9RESect-16.III P-7TIESect-16.III P-8TIESect-16.III P-9TIESect-16.III P-1RESect-16.III P-2RESect-16.III P-3RESect-16.III P-4RESect-16.III P-5RESect-16.III P-6RESect-16.III P-7RESect-16.III P-8RESect-16.III P-9RESect-16.III P-10RESect-16.III P-11RESect-16.III P-12RESect-16.III P-13RESect-16.III P-14RESect-16.III P-15RECh-16 P-1CRCh-16 P-2CRCh-16 P-3CRCh-16 P-4CRCh-16 P-5CRCh-16 P-6CRCh-16 P-7CRCh-16 P-8CRCh-16 P-9CRCh-16 P-10CRCh-16 P-11CRCh-16 P-12CRCh-16 P-13CRCh-16 P-14CRCh-16 P-1ATCh-16 P-2ATCh-16 P-3ATCh-16 P-4ATCh-16 P-5ATCh-16 P-6ATCh-16 P-7ATCh-16 P-8ATCh-16 P-9ATCh-16 P-10ATCh-16 P-11ATCh-16 P-12ATCh-16 P-13AT

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