Question

If your beginning inventory on Jan 1st is 20 bottles of ear cleaner and your ending inventory 6 months later on July 1st is 30 bottles of ear cleaner and you purchased 200 bottles in the 6 month time period, how many turns on ear cleaner for the year?

Answer 1

To calculate the number of turns on ear cleaner for the year, add the beginning and ending inventory and divide by 2. Then, calculate the cost of goods sold (COGS) by subtracting the ending inventory from the total purchases. Finally, divide the COGS by the average inventory to find the number of turns.

Step-by-step explanation:

To calculate the number of turns on ear cleaner for the year, we need to determine the average inventory level during the year. We can do this by adding the beginning inventory to the ending inventory and dividing by 2. So, the average inventory level is (20 + 30) / 2 = 25 bottles.

Next, we need to calculate the cost of goods sold (COGS) for the year. If we purchased 200 bottles during the 6-month time period, the COGS would be the total number of bottles purchased minus the ending inventory. So, COGS = 200 - 30 = 170 bottles.

Finally, to calculate the number of turns, we divide the COGS by the average inventory level. So, turns = COGS / average inventory = 170 / 25 = 6.8 turns on ear cleaner for the year.