Chapter 16.III, Problem 7RE

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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.

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:

The inventory turnover at retail is:

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

Sect-16.I P-1TIESect-16.I P-2TIESect-16.I P-3TIESect-16.I P-4TIESect-16.I P-1RESect-16.I P-2RESect-16.I P-3RESect-16.I P-4RESect-16.I P-5RESect-16.I P-6RE

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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