What Does It Mean If Inventory Turnover Changes from 4

question 33

Multiple Choice

What does it mean if inventory turnover changes from 4 times a year to 5 time a year?

• A)on average, it is taking longer to sell inventory.
• B)on average, inventory is being sold faster.
• C)inventory turnover is too slow.
• D)inventory turnover is faster than the industry average.

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Definitions:

Raw Materials Inventory

The stock of primary materials used in the manufacturing process before they are converted into finished goods.

Factory Labor

The direct and indirect labor costs incurred in manufacturing products, including wages and benefits of workers involved in production.

Total Manufacturing Costs

Sum of all costs directly involved in the manufacturing of a product, including raw materials, labor, and overhead expenses.

Direct Materials Used

The raw materials directly traced to the manufacturing of a product and included in its cost.