Question

From June 1 to the end of the business day on June 30, a restaurant had a food inventory turnover rate of 3.75. Food cost percent was 31.6%. Closing inventory was $6,700.

What was the number of days in which the inventory was turned over in that month?

Answer 1

The restaurant turned over its inventory every 8 days during the month of June.

Step-by-step explanation:

To find the number of days in which the inventory was turned over, we use the turnover rate given. The food inventory turnover rate is the ratio of the cost of goods sold (COGS) to the average inventory during the period. The formula for turnover rate is:

Turnover Rate = COGS / Average Inventory

Given the turnover rate of 3.75 and the closing inventory of $6,700, we can calculate the COGS for the month and then divide that by the daily average cost of goods sold to find the number of turnover days. In this case, June has 30 days; therefore:

COGS = 3.75 * $6,700 = $25,125

Daily COGS = COGS / Number of days = $25,125 / 30 = $837.50

Now we can determine the inventory turnover in days:

Turnover Days = Number of days / Turnover Rate = 30 / 3.75 = 8 days

So it took 8 days to turn over the inventory.