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 11,000 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.) Chart Attached (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.) DSLR cameras Cell phones Video gaming Surround sound Televisions (B PART 2): What can be done to improve the situation? The square footage could be reduced in size in order to increase the "per square foot" sales figures. The square footage could be reduced in size in order to decrease the "per square foot" sales figures. The square footage could be increased in size in order to increase the "per square foot" sales figures. The square footage could be increased in size in order to decrease the "per square foot" sales figures

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Description: 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

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter6: Merchandising Transactions

Section: Chapter Questions

Problem 17Q: A seller sells $800 worth of goods on credit to a customer, with a cost to the seller of $300....

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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 11,000 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.)

*Chart Attached*

(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.)

DSLR cameras
Cell phones
Video gaming
Surround sound
Televisions

(B PART 2): What can be done to improve the situation?

The square footage could be reduced in size in order to increase the "per square foot" sales figures.
The square footage could be reduced in size in order to decrease the "per square foot" sales figures.
The square footage could be increased in size in order to increase the "per square foot" sales figures.
The square footage could be increased in size in order to decrease the "per square foot" sales figures.

Electron Magic-Annual Sales
Average
Inventory
at Retail
Average
Sales per
Annual
Sales per
Inventory
Departmental
Annual Sales
Square
Department
Feet
Turnover
Sq. Foot
Sq. Foot
Televisions
3,500
$151,000
5.2
$4
Surround sound
2,200
$141,000
4.6
$4
DSLR cameras
2,900
$38,500
$4
4.1
$4
Cell phones
500
$12,300
24
2.3
Video gaming
1,900
$45,000
$4
4.7
Total Sales:
14
14
%24

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