B&B Cos. has sales of $732,000 and cost of goods sold of $323,000. The firm had a beginning inventory of $48,000 and an ending inventory of $39,000. What is the length of the days' sales in inventory?

Question

Quizplus · Accepted Answer

To calculate the days' sales in inventory, you first need to find the average inventory, which is (beginning inventory + ending inventory) / 2 = ($48,000 + $39,000) / 2 = $43,500. Then, calculate the inventory turnover ratio, which is cost of goods sold / average inventory = $323,000 / $43,500 = 7.4253. Finally, to find the days' sales in inventory, divide the number of days in a year by the inventory turnover ratio, which is 365 / 7.4253 = 49.15 days, rounding to the nearest hundredth gives 49.02 days, which seems to be a miscalculation in the context of the provided choices. The correct calculation should be: Days' sales in inventory = 365 / (Cost of Goods Sold / Average Inventory). However, the provided answer choices and the calculation steps indicate a discrepancy. Given the correct formula and the steps provided, none of the answer choices accurately reflect the correct calculation based on the standard formula. The correct approach leads to an answer that is not listed, indicating a potential error in the calculation or the interpretation of the answer choices.

B&B Cos Has Sales of $732,000 and Cost of Goods Sold