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Inventory turnover period; When we find inventory turnover period, so inventory we take, it is average of entire inventory (which includes raw material, work in progress and finished goods) which is SOFP or it only average of inventory of finished goods which can be found in SOPL.
I am asking you because, yesterday, I attempted a question in which I was given 2 years’ SOFP and one years SOPL. I was confused how to do that?We can have find average of inventory by Opening Inventory (last year’s SOFP inventory) and this year’s Closing Inventory (SOFP).
Or
We can find average inventory given in SOPL (opening and closing).I would need to see the entire question, but normally the inventory turnover period would be calculated based on the finishes goods. (Was it not clear from the answer what had been done?)
Yes professor, I was a bit unclear as it was taking only closing inventory (of current period) and dividing by cost of sales and into 365.
(CI/COS)x365
The closing inventory he takes is on SOFP which is of RM, FG and WIP.Can I tell you page number of the kit and question number?
Can you please tell professor that I am correct:
Opening and Closing inventory given in SOPL is of Finished goods only
Closing inventory in SOFP is of all (RM, WIP and FG.)?If the question is from the current edition of the BPP Revision Kit then yes – tell me the page number or the question number.
Inventory in the SOFP is all of the inventory.
In the SOPL the cost of sales is adjusted by the opening and closing inventories of finished goods, but the raw material and WIP inventories will adjust the cost of the materials included in the cost of production.
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