the fabric mart had cost of goods sold at $844,000 for the year.the beginning inventory at cost was $305,500, and the ending inventory at cost amounted to $414,200. the inventory turn-over rate published as the industry standard for a business of this size is five times...what is the at cost ? what is the inventory turnover rounded to the nearest tenth? what is the largest average inventory needed to theoretically come up to the industry standard? thanks much
To calculate the cost of goods sold (COGS) at a specific cost, we need to find the difference between the beginning and ending inventory and add it to the COGS.
Beginning Inventory: $305,500
Ending Inventory: $414,200
COGS: $844,000
To find the Difference in Inventory:
Difference in Inventory = Ending Inventory - Beginning Inventory
Difference in Inventory = $414,200 - $305,500
Difference in Inventory = $108,700
To find the COGS at cost:
COGS at cost = COGS + Difference in Inventory
COGS at cost = $844,000 + $108,700
COGS at cost = $952,700
Therefore, the COGS at cost is $952,700.
To calculate the inventory turnover rate, we divide the COGS by the average inventory.
Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Average Inventory = ($305,500 + $414,200) / 2
Average Inventory = $359,850
Inventory Turnover Rate = COGS / Average Inventory
Inventory Turnover Rate = $952,700 / $359,850
Inventory Turnover Rate = 2.65 (rounded to the nearest tenth)
Therefore, the inventory turnover rate, rounded to the nearest tenth, is 2.7.
To find the largest average inventory needed to theoretically reach the industry standard of five times inventory turnover, we can divide the COGS by the industry standard turnover rate.
Largest Average Inventory = COGS / Industry Standard Turnover Rate
Largest Average Inventory = $952,700 / 5
Largest Average Inventory = $190,540
Therefore, the largest average inventory needed to theoretically reach the industry standard of five times inventory turnover is $190,540.