For the year ended December 31, Depot Max's cost of merchandise 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

Question

Quizplus · Accepted Answer

Inventory turnover is calculated as: Cost of Merchandise Sold / Average Inventory

Average inventory is calculated as: (Beginning Inventory + Ending Inventory) / 2

Using the figures given:

Average inventory = ($6,540 + $7,250) / 2 = $6,895

Inventory turnover = $56,900 / $6,895 = 8.25

Therefore, the correct choice is C.

For the Year Ended December 31, Depot Max's Cost of Merchandise