If a firm has annual cost of goods sold of $100 million and turn over inventory twice a month,the average inventory they carry would be
A)$4.167 million.
B)$50 million.
C)$10 million.
D)$18.37 million.

Question

Quizplus · Accepted Answer

The average inventory is calculated by dividing the annual cost of goods sold by the number of times inventory is turned over in a year. With an annual cost of goods sold of $100 million and inventory turned over twice a month (which is 24 times a year), the average inventory is $100 million / 24 = $4.167 million.

If a Firm Has Annual Cost of Goods Sold of $100