Chapter 16.III, Problem 8RE

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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 |
||||||||

8. | $884,500 | $224,130 | $134,900 | _______ | _______ | 5.9 | _______ |

To determine

**To calculate:** The target average inventory when the inventory turnover is less than published rate, average inventory and inventory turnover and round off to nearest tenth when the total cost of goods sold is $884,500 and beginning and ending inventory are $224,130 and $134,900 respectively and the published rate is 5.9 times.

Explanation

**Given Information:**

The beginning and the ending inventory is provided as $224,130 and $134,900 respectively.

The total cost of goods sold is provided as $884,500.

The published rate is provided as 5.9.

**Formula used:**

The average inventory at retail is:

The inventory turnover at retail is:

The target average inventory turnover at retail is:

**Calculation:**

Consider the beginning and ending inventory are provided as $224,130 and $134,900 respectively.

And now calculate the average inventory using the formula,

Now,

Therefore, the average inventory is $179,515

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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