You Are Provided with the Following Information About the Bookstore

question 25

Essay

You are provided with the following information about the bookstore at your university:
Required:
a.Calculate the inventory turnover ratio for the year ended June 30,2017.
b.What is the average length of time that it took to sell its inventory in 2017?
c.Is the inventory turnover ratio satisfactory? What would you need to know to fully answer this question?

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Definitions:

Direct Method

An approach to costing that identifies the variable costs directly attributable to specific cost objects, like products or services.

Service Department Costs

Costs associated with the departments that do not directly produce goods but provide essential support services to production departments.

First-In, First-Out Method

An accounting method for valuing inventory where the oldest items are sold or used first.

Equivalent Units

A concept in process costing that converts partially completed units into a number of equivalent full units for the purpose of cost assignment.