At the start of the year, Sandy's Flowers had inventory worth $587,200 at retail. On December 31, the retail value of the inventory was $137,700. If annual sales amounted to $2,899,600 find the inventory turnover at retail for the year. (Round your answer to the nearest tenth)

Question

Quizplus · Accepted Answer

The inventory turnover at retail is calculated by dividing the cost of goods sold by the average inventory at retail. First, find the cost of goods sold (COGS) at retail: COGS = Opening Inventory + Purchases - Closing Inventory. Since no purchases are mentioned, we assume all sales are from the existing inventory, so COGS = Sales = $2,899,600. The average inventory = (Opening Inventory + Closing Inventory) / 2 = ($587,200 + $137,700) / 2 = $362,450. Inventory turnover = COGS / Average Inventory = $2,899,600 / $362,450 ≈ 8.0.

At the Start of the Year, Sandy's Flowers Had Inventory