Just Camshafts Sells Auto Parts

question 38

Multiple Choice

Just Camshafts sells auto parts. Provided below is selected financial information from the company's 2007 annual report: Just Camshafts forecasts that sales will grow by 25% in 2008 and that its cost of goods sold to sales ratio will be the same in 2008 as it was in 2007. If these assumptions prove correct and Just Camshafts inventory turnover ratio for 2008 is 4.5 what will be the level of inventory at the end of 2008?

• A) $31,353
• B) $38,320
• C) $40,000
• D) $42,314

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Definitions:

Delivery Contract

A legal agreement specifying the terms of delivery for goods or services from a seller to a buyer.

Goods-In-Bailment

A legal term referring to the temporary transfer of possession of personal property by one party to another, with the intent that the property will be returned.

Risk Of Loss

Risk of loss refers to the responsibility for damage or destruction of goods, determining which party bears the financial burden should goods be damaged during a transaction.

Delivery Driver

A delivery driver is a person who transports goods from a seller or distributor to the customer's location.