1. Assignment Exercise 8-2 Inventory Turnover (15 Marks) Study the “Calculating

Question

1. Assignment Exercise 8-2 Inventory Turnover (15 Marks)

Study the “Calculating Inventory Turnover” portion of the chapter closely, whereby the cost of good sold divided by the average inventory equals the inventory turnover.

Required:

Compute two inventory turnover calculations as follows: Use the LIFO information in the previous assignment to first compute the average inventory and then to compute the inventory turnover.

Use the FIFO information in the previous assignment to first compute the average inventory and then to compute the inventory turnover

Explanation / Answer

Ending Inventory (7,000 units x $25) $175,000
Cost of Goods Sold (2,000 units x $20)

(6,000 units x $22)

(1,000 units x $25) $197,000

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