Early in 2011 Westmoreland Company switched to a just in time inventory system. Its sales, cost of goods sold, and inventory amounts for 2010 and 2011 are shown below.
|
2010 |
2011 |
|
|
Sales |
$2,000,000 |
$1,800,000 |
|
Cost of goods sold |
1,000,000 |
910,000 |
|
Beginning inventory |
290,000 |
210,000 |
|
Ending inventory |
210,000 |
50,000 |
|
Sales |
2010 |
2011 |
Determine the inventory turnover and days in inventory for 2010 and 2011. Discuss the changes in the amount of inventory, the inventory turnover and days in inventory, and the amount of sales across the two years.