COST ACCOUNTING
INVENTORY AND PRODUCTION MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The use of paper records from sales transactions to enter data into the system
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The past amounts from each period added up and divided by the number of periods
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When a leader gives little to no direction to team members, but provides support
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An automated system which keeps track of figures so it does not have to be done manually
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Detailed explanation-1: -Average inventory is a calculation of inventory items averaged over two or more accounting periods. To calculate the average inventory over a year, add the inventory counts at the end of each month and then divide that by the number of months.
Detailed explanation-2: -You can calculate the inventory turnover ratio by dividing the inventory days ratio by 365 and flipping the ratio. In this example, inventory turnover ratio = 1 / (73/365) = 5. This means the company can sell and replace its stock of goods five times a year. Source: CFI financial modeling courses.
Detailed explanation-3: -Average inventory is a calculation that estimates the value or number of a particular good or set of goods during two or more specified time periods. Average inventory is the mean value of an inventory within a certain time period, which may vary from the median value of the same data set.
Detailed explanation-4: -Average inventory held is equal to half of the EOQ = EOQ/2. The number of orders in a year = Expected annual demand/EOQ. Total annual holding cost = Average inventory (EOQ/2) x holding cost per unit of inventory.