CC7-1 (Algo) Accounting for Changing Inventory Costs [LO 7-3, LO 7-5] In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling sh ould manage a single product line, Nicole agreed. Nicole's Getaway Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system. On December 31 of last year, NGS had 25 units at a total cost of $5.80 per unit. Nicole purchased 30 more units at $7.80 in February. In March, Nicole purchased 15 units at $9.80 per unit. In May, 60 units were purchased at $9.60 per unit. In June, NGS sold 60 units at a selling price of $11.80 per unit and 55 units at $11.20 per unit. CC7-1 (Algo) Part 3
![CC7-1 (Algo) Accounting for Changing Inventory Costs [LO 7-3, LO 7-5]
In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and
tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a
prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicole's Getaway
Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and
a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system.
On December 31 of last year, NGS had 25 units at a total cost of $5.80 per unit. Nicole purchased 30
more units at $7.80 in February. In March, Nicole purchased 15 units at $9.80 per unit. In May, 60 units
were purchased at $9.60 per unit. In June, NGS sold 60 units at a selling price of $11.80 per unit and 55
units at $11.20 per unit.
CC7-1 (Algo) Part 3
3. Calculate the inventory turnover ratio, using the inventory purchased on December 31 as the beginning invento
your answers to 2 decimal places.)
Numerator
Denominator
Inventory Turnover Ratio
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In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicole’s Getaway Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system
In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicole’s Getaway Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system
Compute the Cost of Goods Available for Sale, Cost of Goods Sold, and Cost of Ending Inventory using the first-in, first-out (FIFO) method
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