Days sales in inventory, A company normally sells its

Days sales in inventory

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Reference no: EM131292030

1. A company normally sells its product for $20 per unit. However, the selling price has fallen to $15 per unit. This company's current inventory consists of 200 units purchased at $16 per unit. Replacement cost has now fallen to $13 per unit. What is the amount of the lower cost of market adjustment the company must make as a result of this decline in value?

$1,000.

$1,400.

$400.

$600.

$800.

2. A company had beginning inventory of 10 units at a cost of $20 each on March 1. On March 2, it purchased 10 units at $22 each. On March 6 it purchased 6 units at $25 each. On March 8, it sold 22 units for $54 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold?

$470

$490

$450

$570

$520

3. Days' sales in inventory:

Is also called days' stock on hand.

Focuses on average inventory rather than ending inventory.

Is used to measure solvency.

Is calculated by dividing cost of goods sold by ending inventory.

Is a substitute for the acid-test ratio.

Reference no: EM131292030

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