The Supremo Hotel's pizzeria incurred $40,000 in cost of sales when generating sales of $100,000 last year. Its food inventory account was $750 at the start of the year and $1,250 at the end of the year.
Food stocks were held in inventory for how many days on average during the year (assume a 360-day year)?

Question

Quizplus · Accepted Answer

The average inventory is ($750 + $1,250) / 2 = $1,000. The inventory turnover ratio is $40,000 / $1,000 = 40. The average days in inventory is 360 / 40 = 9.0 days.

The Supremo Hotel's Pizzeria Incurred $40,000 in Cost of Sales