Inventory Turnover Lower Company and Master Corporation reported the following information for the current year:

a. Explain why companies that use specific identification in assigning costs to inventory and cost of goods sold may be expected to have a lower inventory turnover ratio than companies using FIFO, LIFO, or average cost.

b. Compute the inventory turnover ratios for Lower Company and Master Corporation (Note: cost of goods sold must be computed first).

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Beginning inventory Ending inventory Inventory purchased Lower Company $ 60,000 100,000 300,000 Master Corporation $ 400,000 100,000 1,400,000