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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 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:

average inventory at retail= begining inventory at retail+ending inventory at retail2

Inventory turnover is:

inventory turnover at retail= net sales at retailaverage inventory at retail

Target average inventory at retail is:

target average inventory at retail= net salespublished inventory turnover at retail

Calculation:

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

Now calculate the average inventory using the formula,

average inventory at retail= begining inventory at retail+ending inventory at retail2

Thus,

average inventory at retail= 854000+6503002=15043002=752150

Therefore, the average inventory is $752,150

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