Question

Financial statement data at December 31 for Alpine Company are as follows:

Cost of goods sold $1,050,000
Inventories:
Beginning of year 380,000
End of year 320,000

Determine inventory turnover for the year.
a. 2.8
b. 3.3
c. 1.5
d. 3.0

Answer 1

The correct option is d). The inventory turnover for Alpine Company is found by dividing the cost of goods sold by the average inventory. The computation reveals the inventory turnover to be 3.0.

Step-by-step explanation:

The inventory turnover for Alpine Company can be calculated using the following formula:

Inventory Turnover = Cost of Goods Sold / Average Inventory

First, we calculate the Average Inventory:

Average Inventory = (Beginning Inventory + End Inventory) / 2
Average Inventory = (380,000 + 320,000) / 2
Average Inventory = 700,000 / 2
Average Inventory = 350,000

Now, we calculate Inventory Turnover:

Inventory Turnover = 1,050,000 / 350,000
Inventory Turnover = 3.0

Therefore, the correct answer is d. 3.0.