Question

If a firm is using a perpetual inventory system and is using the average-cost method of valuation, when is a new average cost computed?

a	At the end of the month

b	At the end of the accounting period

c	After each purchase

d	After each sale

At December 31, 2022, the following information (in thousands) was available for Flint Inc.: ending inventory $22,600; beginning inventory $21,800; cost of goods sold $166,500, and sales revenue $450,000.

Calculate the inventory turnover and days in inventory for Flint. (Round answers to 1 decimal places, e.g. 15.2. Use 365 days for calculation.)

Inventory turnover		enter inventory turnover in times	times
Days in inventory		enter days in inventory	days

Answer 1

Answer :
1. C , The new average cost is computed at after each purchase.

Sr.No	Particulars	Amount
A	Opening Stock	$     21,800.00
B	Closing Stock	$     22,600.00
C=(A+B)/2	Average Stock	$     22,200.00
D	Sales Revenue	$ 4,50,000.00
E=D/C	Inventory Turnover ( in Times )	20.30
F	Total Days in Year	365
G=F/E	Inventory Turnover ( In days)	17.99
	Formula Used
Inventory Turnover (Times) = Turnover/Average Stock
Inventory Turnover (Days) = 365/ Inventory Turnover (In times)