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2 April, 13:16

Use the following information for Shafer Company to compute inventory turnover for year 2.

Year 2 Year 1

Net sales $651,500 $583,700

Cost of goods sold 389,300 360,920

Ending inventory 78,500 80,180

a. 8.28

b. 4.89

c. 4.04

d. 7.25

e. 5.89

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  1. 2 April, 13:19
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    The correct answer is B.

    Explanation:

    Giving the following information:

    Year 2 Year 1

    Net sales $651,500 $583,700

    Cost of goods sold 389,300 360,920

    Ending inventory 78,500 80,180

    To calculate the inventory turnover, we need to use the following formula:

    Inventory turnover = Cost of goods sold / average inventory

    Average inventory = (beginning inventory + ending inventory) / 2

    Average inventory = 158,680/2 = 79,340

    Inventory turnover = 389,300/79,340

    Inventory turnover = 4.91
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