The net sales for Casual Fashions, Inc. last year amounted to $1,126,800 and the average inventory at retail was $212,604. The published inventory turnover at retail is 6. Calculate the inventory turnover at retail, and if it is less than the published rate, calculate the target average inventory at retail. (Round your answer to the nearest dollar)
A) Turnover is greater
B) $178,800
C) $187,800
D) $212,500

Question

Quizplus · Accepted Answer

The inventory turnover at retail is calculated as net sales divided by average inventory at retail, which is $1,126,800 / $212,604 = 5.3. Since 5.3 is less than the published rate of 6, the target average inventory at retail is calculated as net sales divided by the published turnover rate, which is $1,126,800 / 6 = $187,800.

The Net Sales for Casual Fashions, Inc