The records at the end of January 2012 for Captain Company showed the following for a particular kind of merchandise:
Inventory, December 31, 2011, at FIFO: 19 Units @ $16 = $304
Inventory, December 31, 2011, at LIFO: 19 Units @ $12 = $228
|Transactions||Units||Unit Cost||Total Cost|
|Purchase, January 9, 2012||25||$14||$350|
|Purchase, January 20, 2012||50||19||950|
|Sale, January 21, 2012 (at $38 per unit)||40|
|Sale, January 27, 2012 (at $39 per unit)||28|
1. Compute the inventory turnover ratio under the FIFO and LIFO inventory costing methods (show computations and round to the nearest dollar).
2. Which costing method is the more accurate indicator of the efficiency of inventory management? Explain.
Inventory turnover ratio is a turnover ratio which measures the ability of a company in selling off its inventory during a pre determined period. A low turnover ratio represents weak selling and a high ratio represents the good position in selling.
Answer and Explanation: 1
1. Calculation of Inventory Turnover Ratio:
See full answer below.
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fromChapter 6 / Lesson 11
Inventory valuation methods are ways that companies place a monetary value on the items they have in their inventory. Discover different inventory valuation methods, including specific identification, First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and weighted average.