Burner & Brett, a partnership, had the following inventory data: Burner & Brett need to know the
Question:
Burner & Brett, a partnership, had the following inventory data:
Burner & Brett need to know the company's gross profit percentage and rate of inventory turnover for 2012 under
1. FIFO.
2. LIFO.
Which method produces a higher gross profit percentage? Inventory turnover?
2011 2012 Ending inventory at: $22,000 S 26,000 9,000 21,000 LIFO Cost. Cost of goods sold at: FIFO Cost. LIFO Cost.. 85,800 92,900 139,000 Sales revenue...
Step by Step Answer:
Req 1 and 2 1 2 FIFO LIFO Gross profit percentage 139000 8...View the full answer
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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