A small firm has an ending inventory of $52,000 as at December 31, 2012 and the following accounting information.

a. Compute the monthly inventory turnover ratio for each of the twelve months.

b. What are the annual cost of goods sold and the average inventory for the year?

c. Compute the annual inventory turnover ratio. What can the purchasing department do to improve the firm€™s performance?

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Cost of Goods Sold Month Ending Inventory $75,000 $225,000 January February $56,000 $325,000 March $25,000 S240,000 $325,000 April $85,000 $125,000 $460,000 May $95,000 June $220,000 July $85,000 S72,000 $45,000 $156,000 August September $52,500 $220,000 October $120,000 $265,000 November $162,500 $100,000 December $255,000 $350,000