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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.

Net Sale Cost of Goods Sold BeginningInventory Ending Inventory Average Inventory InventoryTurnover PublishedRate Target Average Inventory
7. $1,329,000 $545,800 $387,120 26

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 provided as $1,329,000 and beginning and ending inventory are provided as $545,800 and $387,120 respectively and the published rate is provided as 2.6.

Explanation

Given Information:

The beginning and the ending inventory are provided as $545,800 and $387,120 respectively

The net sale is provided as $1,329,000.

The published inventory turnover is provided as 2.6

Formula used:

The average inventory is:

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

The inventory turnover at retail is:

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

To round off follow the steps shown below:

Step 1: round off to the nearest tenths find out the value at the tenths place.

Step 2: compare the digit next to the unit place to the 5, if the value is greater than or equals to 5 than increment it by one, otherwise, just remove the number next to it and leave it as it is.

Calculation:

Consider the beginning and ending inventory are provided as $545,800 and $387,120 respectively

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