Question

In: Accounting

Early in 2022, Blossom Company switched to a just-in-time inventory system. Its sales and inventory amounts...

Early in 2022, Blossom Company switched to a just-in-time inventory system. Its sales and inventory amounts for 2021 and 2022 are shown below.

2021

2022

Sales revenue

 $3,450,000 $3,900,000

Cost of goods sold

 1,292,000 1,858,500

Beginning inventory

 155,000 225,000

Ending inventory

 225,000 90,000


Determine the inventory turnover for 2021 and 2022. (Round answers to 1 decimal place, e.g. 5.1.)

2021

2022

Inventory turnover

Determine the days in inventory for 2021 and 2022. (Round answers to 1 decimal place, e.g. 5.1.)

2021

2022

Days in inventory

      

Solutions

Expert Solution

Inventory turnover or Inventory turnover ratio is the number of times a company has sold and replaced its inventory during a given period. It is calculated as :

Inventory Turnover = Cost of Goods Sold / Average Inventory

where,

Average Inventory = (Beginning Inventory + Ending Inventory) / 2

Compuation of Inventory Turnover for 2021 and 2022

Inventory Turnover 2021 = Cost of Goods Sold / Average Inventory
= 1,292,000 / [ ( 155,000 + 225,000) / 2 ]
= 1,292,000 / 190,000
= 6.8


Inventory Turnover 2022 = Cost of Goods Sold / Average Inventory
= 1,858,500 / [ ( 225,000 + 90,000 ) / 2 ]
= 1,858,500 / 157,500
= 11.8

Computation of Days in Inventory for 2021 and 2022

Days in inventory refers to number of days it takes for inventory to turn into sales.


Days in Inventory 2021 = 365 / Inventory turnvover = 365 / 6.8 = 53.68 days


Days in Inventory 2022 = 365 / Inventory Turnover = 365 / 11.8 = 30.93 days

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

A microwave manufacturing company has just switched to a new automated production system. Unfortunately, the new...
A microwave manufacturing company has just switched to a new automated production system. Unfortunately, the new machinery has been frequently failing and requiring repairs and service. The company has been able to provide its customers with a completion time of 6 days or less. To analyze whether the completion time has increased, the production manager took a sample of 36 jobs and found that the sample mean completion time was 6.5 days with a sample standard deviation of 1.5 days....
Walmart (WMT) is famously known for its Just in Time Inventory Management system, how do you...
Walmart (WMT) is famously known for its Just in Time Inventory Management system, how do you think the system has played a role in the company’s profitability?
Blossom Company uses a periodic inventory system. For April, when the company sold 550 units, the...
Blossom Company uses a periodic inventory system. For April, when the company sold 550 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 300 $33 $ 9,900 April 15 purchase 440 40 17,600 April 23 purchase 260 43 11,180 1,000 $38,680 Compute the April 30 inventory and the April cost of goods sold using the LIFO method. Ending inventory $enter a dollar amount Cost of goods sold $enter a dollar amount
Blossom Company uses a periodic inventory system. For April, when the company sold 550 units, the...
Blossom Company uses a periodic inventory system. For April, when the company sold 550 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 300 $33 $ 9,900 April 15 purchase 440 40 17,600 April 23 purchase 260 43 11,180 1,000 $38,680 Compute the April 30 inventory and the April cost of goods sold using the FIFO method. Ending inventory $enter a dollar amount Cost of goods sold $enter a dollar amount
Blossom Company uses a periodic inventory system. For April, when the company sold 550 units, the...
Blossom Company uses a periodic inventory system. For April, when the company sold 550 units, the following information is available. April 1 inventory 300 $33 $ 9,900 April 15 purchase 440 40 17,600 April 23 purchase 260 43 11,180 1,000 $38,680 Compute the April 30 inventory and the April cost of goods sold using the LIFO method. Ending Inventory $ Cost of goods sold $ Compute the April 30 inventory and the April cost of goods sold using the FIFO...
Blossom Company is trying to determine the value of its ending inventory as at February 28,...
Blossom Company is trying to determine the value of its ending inventory as at February 28, 2017, the company’s year end. The accountant counted everything that was in the warehouse as at February 28, which resulted in an ending inventory valuation of $61,000. However, he was not sure how to treat the following transactions, so he did not include them in inventory. For each of the below transactions, specify whether the item should be included in ending inventory, and if...
You are the controller of a company that has just switched to IFRS. For the area...
You are the controller of a company that has just switched to IFRS. For the area of PP&E you have asked the programmer for the PP&E system to include a routine that forces users to re-enter information each year. For which field would it be appropriate to include in this routine. a. Residual value b. Asset name c. Cost d. Date placed in service
Blossom Corp.’s sales slumped badly in 2020. For the first time in its history, it operated...
Blossom Corp.’s sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 505,500 units of product: sales $2,527,500, total costs and expenses $2,611,625, and net loss $84,125. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,146,565 $1,733,865 $412,700 Selling expenses 252,750 93,012 159,738 Administrative expenses 212,310 68,748 143,562 $2,611,625 $1,895,625 $716,000 Management is considering the...
1) Calculate the missing amounts for each company. Sales Revenue Beginning Inventory Inventory Purchases Ending Inventory...
1) Calculate the missing amounts for each company. Sales Revenue Beginning Inventory Inventory Purchases Ending Inventory COGS Gross Profit Company 1 $100,000 $20,000 $65,000 $22,000 A B Company 2 $140,000 $25,000 C $30,000 D $45,000 Company 3 E F $45,000 $20,000 $50,000 $35,000 Company 4 $85,000 $10,000 $30,000 G $35,000 H
Blossom Company expects to have a cash balance of $23,000 on January 1, 2022. These are...
Blossom Company expects to have a cash balance of $23,000 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022. 1. Collections from customers: January $35,500, February $73,000. 2. Payments to suppliers: January $20,000, February $37,500. 3. Wages: January $15,000, February $20,000. Wages are paid in the month they are incurred. 4. Administrative expenses: January $10,500, February $12,000. These costs include depreciation of $500 per month. All other costs are paid as...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT