Question

The following accounting information pertains to two grocery store chains. One grocery store chain has a market strategy of selling only high end organic food products while the other grocery store sells less expensive foods that are traditionally grown with the use of pesticides, synthetic fertilizers, and/or genetically modified organisms.

The company selling traditional produced foods has an average inventory balance of $45,000, while the company selling organic foods has an average inventory balance of $40,000.

a. Complete the table by filling in the missing amounts.
b. Which grocery store chain is taking a lower cost/higher volume strategy as it relates to sales?
c1. Calculate the inventory turnover and average days to sell inventory for each grocery store chain.
c2. Based on your calculations, which grocery chain will be required to reorder inventory more frequently?

Complete this question by entering your answers in the tabs below.

Req A Reg B Req C1 Req c2 Complete the table by filling in the missing amounts. Organic Traditional $ 600,000 Sales Cost of Goods Sold Gross Margin Gross Margin Percentage $ $ L 300,000 200,000 35% < Req A ReqB >

Answer 1

Answer is given below

Sales Cost of Goods sold Gross Margin Gross Margin Percentage Traditional $600,000 $390,000 $210,000 35% Organic $500,000 $300,000 $200,000 40% b Lower cost /high volume strategy Organic Inventory turnover Ratios 8.67 times 7.50 times Average days to sell inventory 42 days 49 days c1 Traditional Organic working notes: Inventory turnover Cost of goods sold Average inventory 8.7 $390,000 $45,000 7.5 A/B $300,000 A $40,000 B Days to sell inventory 365 days Inventory turnover 49 A/B 365 A c2 Reorder inventory more times Traditional