If a Firm’s Inventories on Hand Are $200,000, Its Cost

question 71

Multiple Choice

If a firm’s inventories on hand are $200,000, its cost of goods sold is $600,000, and its sales are $800,000, what is the inventory turnover?

• A) 2 times
• B) 3 times
• C) 4 times
• D) 5 times

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Definitions:

Marginal Cost

The augmentation in cumulative costs linked with generating an extra unit of a product or service.

Average Cost

The overall expense of manufacturing split by the quantity of units made.

Rate of Return

The increase or decrease in value of an investment throughout a determined period, shown as a percent of the investment’s initial cost.

Natural Monopolies

A market situation where a single supplier, due to unique resources, technology, or economies of scale, can provide a product or service at a lower cost than any potential competitor.