Another way to look at the concept of inventory turnover is by measuring sales per square foot. Taking the average inventory at retail and dividing it by the number of square feet devoted to a particular product will give you average sales per square foot. When you multiply this figure by the inventory turnover rate, you get the annual sales per square foot. It is important to know the amount of sales per square foot your merchandise is producing, both on average and annually. These figures should be tracked monthly and compared with industry standards for businesses of similar size and type. You own a large multi product electronics store in a regional mall. The store has 10,600 square feet of selling space divided into five departments. (a) From the table below, calculate the average and annual sales (in $) per square foot. Then calculate the annual sales (in $) for each department and the total sales (in $) for the entire store. (Round your average and annual sales per square foot to the nearest cent. Round your annual sales for each department and total sales to the nearest dollar.) (b) If industry standards for this size store and type of merchandise is $200 per square foot in annual sales, which departments are below standards? (Select all that apply.) What can be done to improve the situation?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Another way to look at the concept of inventory turnover is by measuring sales per square foot. Taking the average inventory at retail and dividing it by the number of square feet devoted to a particular product will give you average sales per square foot. When you multiply this figure by the inventory turnover rate, you get the annual sales per square foot.

It is important to know the amount of sales per square foot your merchandise is producing, both on average and annually. These figures should be tracked monthly and compared with industry standards for businesses of similar size and type.

You own a large multi product electronics store in a regional mall. The store has 10,600 square feet of selling space divided into five departments.

(a) From the table below, calculate the average and annual sales (in $) per square foot. Then calculate the annual sales (in $) for each department and the total sales (in $) for the entire store. (Round your average and annual sales per square foot to the nearest cent. Round your annual sales for each department and total sales to the nearest dollar.)

(b) If industry standards for this size store and type of merchandise is $200 per square foot in annual sales, which departments are below standards? (Select all that apply.)

What can be done to improve the situation?

Another way to look at the concept of inventory turnover is by measuring sales per square foot. Taking the average inventory at retail and dividing it by the number of square feet devoted to a particular
product will give you average sales per square foot. When you multiply this figure by the inventory turnover rate, you get the annual sales per square foot.
It is important to know the amount of sales per square foot your merchandise is producing, both on average and annually. These figures should be tracked monthly and compared with industry standards for
businesses of similar size and type.
You own a large multi product electronics store in a regional mall. The store has 10,600 square feet of selling space divided into five departments.
(a) From the table below, calculate the average and annual sales (in $) per square foot. Then calculate the annual sales (in $) for each department and the total sales (in $) for the entire store. (Round your
average and annual sales per square foot to the nearest cent. Round your annual sales for each department and total sales to the nearest dollar.)
Electron Magic-Annual Sales
Average
Inventory
at Retail
Average
Sales per
Sq. Foot
Annual
Sales per
Sq. Foot
$ 12,917.92
Square
Feet
Inventory
Turnover
Departmental
Annual Sales
Department
Televisions
3,500
$155,000
$ 44.29
5.2
Surround sound
2,600
$141,000
$ 54.23
4.6
24
$
DSLR cameras
2,300
$38,500
$ 16.74
4.1
$
2$
Cell phones
500
$12,100
$ 24.20
2.3
$4
$
Video gaming
1,700
$45,000
$ 26.47
4.7
$4
$
Total Sales:
$4
(b) If industry standards for this size store and type of merchandise is $200 per square foot in annual sales, which departments are below standards? (Select all that apply.)
O DSLR cameras
O Televisions
O Video gaming
O Cell phones
O Surround sound
What can be done to improve the situation?
O The square footage could be reduced in size in order to increase the "per square foot" sales figures.
O The square footage could be increased in size in order to increase the "per square foot" sales figures.
O The square footage could be reduced in size in order to decrease the "per square foot" sales figures.
O The square footage could be increased in size in order to decrease the "per square foot" sales figures.

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