Answer:
The average days in inventory are 5 days
Explanation:
The average days in inventory is computed or evaluated as:
Average days in inventory = COGS (Cost Of Goods Sold) / Average Inventories
where
COGS (Cost Of Goods Sold) amounts to $450,000
Average Inventories is computed as:
Average Inventories = Beginning Inventory + Ending Inventory / 2
where
Beginning Inventory amounts to $80,000
Ending Inventory amounts to $100,000
Putting the values:
Average Inventories = $80,000 + $100,000 / 2
= $180,000 / 2
Average Inventories = $90,000
Now, putting the values above in the formula:
Average days in inventory = $450,000 / $90,000
= 5 days
