Cromwell Company Began the Year with a Balance in Inventory

question 114

Multiple Choice

Cromwell Company began the year with a balance in inventory of $110,000 and ended the year with a balance of $102,000.The net sales for the year were $983,000 with a gross profit on sales of $295,000.The inventory turnover ratio is closest to:

• A)2.78
• B)9.27
• C)6.49
• D)2.89

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Definitions:

Supervisor's Salary

The amount paid to the individual overseeing and managing a group of employees or a particular department within a company.

Net Operating Income

Net operating income reflects the profit a company makes from its operations, exclusive of taxes and interest.

Variable Costs

are expenses that change in proportion to the activity of a business, such as raw material costs, which increase with the level of production.

Direct Labor

Factory labor costs that can be easily traced to individual units of product. Also called touch labor.