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AMM-3500 RMI: RETAIL METHOD OF INVENTORY VALUATION Jasmine Nuber is the store manager for a large women's wear store in Southern California. Two of her department managers have requested additional square footage for their departments. Jasmine is analyzing each department's performance to determine which department is more profitable for the store, and therefore, may be a better candidate for space extension. She has the following department figures from both: Details Sportswear Formalwear Net Sales 356000 315000 Opening Inventory 230000 180000 Gross Purchases 510000 520000 Vendor Returns 26000 19000 Employee discounts 3000 2500 Markdowns 75000 40000 Cash Discounts 10000 15000 Closing Physical Inventory Operating Expenses 285000 305000 127000 155000 Markup % 51% 65% Alterations 1000 7000 Questions: A Compare shortages/overages (in %) for both departments and discuss which one is doing a better job of managing inventory? B. Compare Maintained Markup% and Gross margin % and discuss which department is indicating better performance on those two parameters? C. Compare GMROI for the two departments and discuss those figures as well. ("For Avg inventory@ cost: use average of opening Inv. and closing physical inventory for each department) D. Calculate Operating Expense % and Profit % for both departments E. Suggest which department should be granted expansion and indicate basis for your recommendation

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