Beginning inventory was $8,000, ending inventory was $6,000, and food cost was $28,000. What is the inventory turnover rate for the period?

Beginning inventory was $8,000, ending inventory was $6,000, and food cost was $28,000. What is the inventory turnover rate for the period?

• A. 3.0 times
• B. 2.0 times
• C. 4.0 times
• D. 3.5 times

Answer: (C)

Inventory turnover rate shows how many times the kitchen uses up and replaces its inventory during a period. It’s calculated by dividing cost of goods sold by the average inventory for the period. Here, the cost of goods sold is the food cost: 28,000. The average inventory is (beginning 8,000 + ending 6,000) ÷ 2 = 7,000. Dividing 28,000 by 7,000 gives 4.0. So the inventory turns 4 times during the period. Using average inventory helps smooth out fluctuations rather than relying on a single snapshot. Higher turnover indicates more efficient use of inventory and less tied-up capital.

Inventory turnover rate shows how many times the kitchen uses up and replaces its inventory during a period. It’s calculated by dividing cost of goods sold by the average inventory for the period. Here, the cost of goods sold is the food cost: 28,000. The average inventory is (beginning 8,000 + ending 6,000) ÷ 2 = 7,000. Dividing 28,000 by 7,000 gives 4.0. So the inventory turns 4 times during the period. Using average inventory helps smooth out fluctuations rather than relying on a single snapshot. Higher turnover indicates more efficient use of inventory and less tied-up capital.