Palmer Chocolates, a maker of chocolates that specializes in Easter candy, had the following inventories over the past year:
|
Month
|
Inventory Amount
|
|
January
|
$ 25,000,000
|
|
February
|
60,000,000
|
|
March
|
90,000,000
|
|
April
|
30,000,000
|
|
May
|
20,000,000
|
|
June
|
22,000,000
|
|
July
|
25,000,000
|
|
August
|
38,000,000
|
|
September
|
50,000,000
|
|
October
|
60,000,000
|
|
November
|
70,000,000
|
|
December
|
30,000,000
|
Palmer had sales of $290 million over the past year. Cost of sales constituted 50 percent of sales.
Calculate Palmer's inventory turnover using beginning of year inventory, end of year inventory, and a monthly average inventory. Which method do you feel is most appropriate? Why?