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QUESTION (ONLY NEED QUESTION #4 EXCEL LINE 31 ANSWERED):

31 4. For Scenarios 2 through 4, explain what change occurred relative to Scenario 1 to cause the gross margin return on inve

DATA FOR QUESTION (THE INFORMATION BELOW IS FOR REFERENCE ONLY):

1 Part 2 3 Below are data for four scenarios. Scenario 1 is the base scenario and the other 3 scenarios are modifications to

19 2. Compute the inventory turnover for each scenario. 20 21 Scenario 1 Scenario 2 Scenario 3 Scenario 4 22 Inventory Turnov

24 25 3. Compute the gross margin return on inventory investment percent for each scenario. 27 Scenario 1 Scenario 2 Scenario

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Answer #1
Scenario 1 Scenario 2 Scenario 3 Scenario 4
Inventory Turnover                1.60                  2.00                1.20                2.00
8,000 / 5,000 10,000 / 5,000 6,000 / 5,000 8,000 / 4,000
Scenario 1 Scenario 2 Scenario 3 Scenario 4
GMROI 40% 200% 80% 50%
2,000 / 5,000 10,000 / 5,000 4,000 / 5,000 2,000 / 4,000
Scenario 2 Scenario 3 Scenario 4
Change is because of higher COGS and double sales Change is because of lower COGS Change is because of lower average inventory
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