Use the LIFO information in the previous assignment to first compute the average inventory and then to compute the inventory turnover.

Required

1. In addition to the contribution margin figures already computed, now compute the PV ratio (also known as the CM ratio).
2. Add another column to your worksheet and compute the clinic’s per-visit revenue and costs.
3. Create a Cost-Volume-Profit chart. Refer to the chapter text along with Figure 7–6.

CHAPTER 8
Assignment Exercise 8–1: FIFO and LIFO Inventory

Study the FIFO and LIFO explanations in the chapter.
Required

a1. Use the format in Exhibit 8–1 to compute the ending FIFO inventory and the cost of goods sold, assuming $90,000 in sales; beginning inventory 500 units @ $50; purchases of 400 units @ $50; 100 units @ $65; 400 units @ $80.
a2. Also compute the cost of goods sold percentage of sales.
b1. Use the format in Exhibit 8–2 to compute the ending LIFO inventory and the cost of goods sold, using same assumptions.
b2. Also compute the cost of goods sold percentage of sales.
c. Comment on the difference in outcomes.

Assignment Exercise 8–2: Inventory Turnover

Study the “Calculating Inventory Turnover” portion of the chapter closely, whereby the cost of goods sold divided by the average inventory equals the inventory turnover.
Required

Compute two inventory turnover calculations as follows:

1. Use the LIFO information in the previous assignment to first compute the average inventory and then to compute the inventory turnover.
2. Use the FIFO information in the previous assignment to first compute the average inventory and then to compute the inventory turnover.

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