Asked by Micaiah Blackford on Jul 29, 2024
Verified
For the year ended December 31, Depot Max's cost of goods sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Compute Depot Max's inventory turnover for the year.
A) 8.7
B) 7.8
C) 8.3
D) 44.0
Inventory Turnover
A ratio indicating how often a company sells and replaces its stock of goods within a certain period, reflecting the efficiency of inventory management.
Cost of Goods Sold
The total cost associated with making or purchasing the products that a company sells during a period.
Ending Inventory
The worth of merchandise ready for sale at the conclusion of an accounting cycle, determined by adding beginning inventory to purchases and subtracting the cost of goods sold.
- Determine the balances of inventory, cost associated with goods sold, and figures for inventory turnover.
Verified Answer
CD
Carolyn DavisJul 30, 2024
Final Answer :
C
Explanation :
Inventory turnover ratio = Cost of goods sold / Average inventory
Average inventory = (Beginning inventory + Ending inventory) / 2
Average inventory = ($6540 + $7250) / 2
Average inventory = $6895
Inventory turnover ratio = $56900 / $6895
Inventory turnover ratio = 8.25
Therefore, the answer is C) 8.3.
Average inventory = (Beginning inventory + Ending inventory) / 2
Average inventory = ($6540 + $7250) / 2
Average inventory = $6895
Inventory turnover ratio = $56900 / $6895
Inventory turnover ratio = 8.25
Therefore, the answer is C) 8.3.
Learning Objectives
- Determine the balances of inventory, cost associated with goods sold, and figures for inventory turnover.