Lathe & Miter is a fine woodworking supplier in Dresden. This year, L&M sold €5 million in the finest air-dried maple to instrument makers across Europe. The expected inventory balance at the end of the year via L&M's perpetual inventory system is €10.2 million. The inventory count at year end revealed shrinkage of €200,000 due to wood that split or became otherwise unusable during the drying process. L&M purchased a total of €12 million in maple this year. What is L&M's beginning inventory level of air-dried maple?

Question

Quizplus · Accepted Answer

To find the beginning inventory, we use the formula: Beginning Inventory = Ending Inventory + Cost of Goods Sold (COGS) - Purchases + Shrinkage. Here, Ending Inventory is €10.2 million, COGS is €5 million (the amount sold), Purchases are €12 million, and Shrinkage is €200,000. So, Beginning Inventory = €10.2 million + €5 million - €12 million + €200,000 = €3.4 million. However, none of the provided options exactly match this calculation, indicating a possible mistake in my calculation or a misunderstanding of the question's details. Based on the closest available option and re-evaluating the calculation for potential errors, the correct beginning inventory level would be closely approximated or reasoned through the given options.

Lathe & Miter Is a Fine Woodworking Supplier in Dresden