A company has an average inventory on hand of ¥60,000,000 and the days in inventory is 73 days. What is the cost of goods sold?
A) ¥300,000,000
B) ¥4,380,000,000
C) ¥600,000,000
D) ¥2,190,000,000

Question

Quizplus · Accepted Answer

The cost of goods sold is calculated by multiplying the average inventory on hand by the inventory turnover ratio. The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory on hand. In this case, the cost of goods sold is not given, so we cannot calculate the inventory turnover ratio. However, we can use the days in inventory to estimate the cost of goods sold. The days in inventory is calculated by dividing the average inventory on hand by the cost of goods sold. In this case, the days in inventory is 73 days, so the cost of goods sold is approximately ¥60,000,000 / 73 days = ¥821,917.81.

A Company Has an Average Inventory on Hand of ¥60,000,000