The cost of goods sold for Home Depot last year amounted to and the average inventory at cost was . The published inveriory
turnover at cost is 5,2 . Calculate the inventory turnover at cost, and if it is less than the published rate, calculate the target average inventory at cost.
Select one:
a.
b.
(c.
(d.

Ask by Gray Stewart. in the United States

Mar 31,2025

Question

The cost of goods sold for Home Depot last year amounted to and the average inventory at cost was . The published inveriory
turnover at cost is 5,2 . Calculate the inventory turnover at cost, and if it is less than the published rate, calculate the target average inventory at cost.
Select one:
a.
b.
(c.
(d.

Ask by Gray Stewart. in the United States

Mar 31,2025

UpStudy AI · Accepted Answer

**Step 1. Calculate the actual inventory turnover at cost**

The formula for inventory turnover is  
$$
\text{Inventory Turnover} = \frac{\text{COGS}}{\text{Average Inventory at Cost}}
$$

Given:  
$$
\text{COGS} = \$3{,}530{,}800,\quad \text{Average Inventory} = \$1{,}174{,}182
$$

Thus,  
$$
\text{Inventory Turnover} = \frac{3{,}530{,}800}{1{,}174{,}182} \approx 3.0
$$

**Step 2. Compare the actual turnover with the published rate**

The published inventory turnover at cost is $$5.2$$. Since $$3.0 < 5.2$$, the actual turnover is less than the published rate.

**Step 3. Calculate the target average inventory at cost**

To achieve the published turnover of $$5.2$$, the target average inventory is calculated as:
$$
\text{Target Average Inventory} = \frac{\text{COGS}}{\text{Published Inventory Turnover}} = \frac{3{,}530{,}800}{5.2}
$$

Performing the calculation:
$$
\frac{3{,}530{,}800}{5.2} = 679{,}000
$$

**Conclusion**

The target average inventory at cost is $$\$679{,}000$$. Therefore, the correct answer is:

b. $$\$679{,}000$$
The target average inventory at cost is \$679,000.

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