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adarsh 03 April 2020 at 17:49 PM
During the year ended June 30, 20X5, Dixon’s Dog Supplies earned gross profit of $25,000, which represented a mark-up of 50%. Opening inventory was $3,000 and closing inventory was $5,000. The inventory turnover ratio was: a) 6.25 times b) 2.78 times c) 5.00 times d) 12.50 times.
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FACULTY 09 May 2020 at 11:58 AM
Gross profit = $25000
mark up = 50%
that means, cost of good sold =250000*100/50 = 50000
opening inventory =$3000
closing inventory = $5000
Average inventory = Opening inventory +closing inventory /2 = 3000+5000/2
average inventory = = 3000+5000/2 =4000
Inventory turnover ratio = cost of good sold/average inventory
=50000/4000
=12.5 (option D)
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MelvolHarden 14 March 2026 at 12:42 PM
Calculating the inventory turnover for Dixon’s Dog Supplies can be a bit tricky at first, but it becomes clearer with a structured approach, much like solving a challenging Pips NYT puzzle. First, we find the cost of goods sold (COGS). With a gross profit of $25,000 and a 50% mark-up, the COGS is $25,000 ÷ 0.5 = $50,000. Next, the average inventory is ($3,000 + $5,000) ÷ 2 = $4,000. The inventory turnover ratio is then COGS ÷ average inventory = $50,000 ÷ $4,000 = 12.5 times. This matches option d). Just like in Pips NYT, careful calculation and step-by-step reasoning lead to the correct answer.
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