Assignment Exercise 82: Inventory Turnover Study the Calculating Inventory Turnover portion of the chapter closely, whereby the cost of goods sold divided by the average inventory equals the inventory turnover. Compute two inventory turnover calculations as follows: 1. Use the LIFO information in the previous assignment to first compute the average inventory and then to compute the inventory turnover. 2. Use the FIFO information in the previous assignment to first compute the average inventory and then to compute the inventory turnover.

Assumptions FIFO Inventory Effect

Sales (Revenue) 20 units @$25 = $500

Cost of Sales:

Beginning Inventory 10 units @$5 = $50

Plus Purchases 10 units @$10 = 100 &

10 units @$5 = $150 250

Subtotal $300

Less: Ending Inventory 10 units @$15 (50)

Cost of Sales 250

Gross Profit $250

Operating Expense (50)

Earnings Before Tax $200

Income Tax (60)

Earning After Tax $140