Question

Delmar Company had beginning inventory of $90,000, ending inventory of $110,000, cost of goods sold of $550,000, and sales of $800,000. Delmar's days in inventory is:

Answer 1

Days in inventory is 66 days

Step-by-step explanation:

The formula for days in inventory is 365 days/inventory turnover while inventory turnover is costs of good sold divided by average inventory.

costs of goods sold is $550,000

average inventory is ($90,000+$110,000)/2=$100,000

inventory turnover =$550,000/$100000

inventory turnover =5.5 times

The days in inventory can then be computed thus:

days in inventory=365 days/5.5=66.36 days

The days in inventory is the average number of days that it took inventory to be sold and it is approximately 66 days in this instance