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19 April, 10:31

RoBags Company Ltd. manufactures bags for kids. Given the following: Cost of the goods sold is $2,900, the purchase price for leather is $1,200, and the inventory amounts to $300, calculate the days sales in inventory.

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  1. 19 April, 10:32
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    38 days

    Explanation:

    The average length of time that inventory is held before it is sold is known as days sales in inventory.

    Days sales in inventory can be calculated using the below formula

    Days sales of inventory = (Average inventory/Cost of good sold) * 365

    In this question

    Cost of good sold=$2900

    Average inventory=$300

    Day sales of inventory = (300/2900) * 365=38 days
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