# Step-by-Step Solution: Average Days in Inventory for 2027 We are asked to **compute the average days in inventory for 2027** using provided data. ## 1. **Formula for Average Days in Inventory** \[ \text{Average Days in Inventory} = \frac{365}{\text{Inventory Turnover}} \] Where: \[ \text{Inventory Turnover} = \frac{\text{Cost of Goods Sold (COGS)}}{\text{Average Inventory}} \] --- ## 2. **Find the Required Values** ### - **COGS for 2027:** From the table, COGS for 2027 = **$450,000** ### - **Inventory at 2026 and 2027:** - Inventory (2026): $78,000 - Inventory (2027): $83,000 ### - **Average Inventory:** \[ \text{Average Inventory} = \frac{\text{Inventory}_{\text{beginning}} + \text{Inventory}_{\text{end}}}{2} = \frac{78,000 + 83,000}{2} = \frac{161,000}{2} = 80,500 \] **Explanation:** We take the average of beginning and ending inventory to reflect inventory levels throughout the year. --- ## 3. **Calculate Inventory Turnover** \[ \text{Inventory Turnover} = \frac{\text{COGS}}{\text{Average Inventory}} = \frac{450,000}{80,500} \approx 5.59 \] **Explanation:** Inventory turnover shows how many times inventory was sold and replaced over the year. --- ## 4. **Calculate Average Days in Inventory** \[ \text{Average Days in Inventory} = \frac{365}{5.59} \approx 65.29 \text{ days} \] **Explanation:** This tells us, on average, how long inventory items remain before being sold. --- ## **Final Conclusion** **The average days in inventory for Missoula Incorporated in 2027 is:** \[ \boxed{65.29 \text{ days}} \] This means it takes about 65.29 days, on average, for inventory to be sold.