A. This answer is incorrect. See the correct answer for a complete explanation.
B. This answer is incorrect. See the correct answer for a complete explanation.
C. The inventory turnover is calculated as average the cost of sales divided by the average annual inventory. They give us in the problem the annual cost of sales of $220,000. The average inventory is $55,000. The inventory turnover is calculated as $220,000 divided by $55,000, or 4 times. This means that Lisa sells their inventory four times a year.
D. This answer is incorrect. See the correct answer for a complete explanation.
