Early in 2010 Westmoreland Company switched to a just in time inventory system. Its sales, cost of goods sold, and inventory amounts for 2009 and 2010 are shown below.
|
2009 |
2010 |
|
|
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 |
Determine the inventory turnover and days in inventory for 2009 and 2010. Discuss the changes in the amount of inventory, the inventory turnover and days in inventory, and the amount of sales across the two years.