Acct 6
she has 1,500 units (products) in her basement, 30 of which were damaged by water and cannot be sold. She also has another 250 units in her van, ready to deliver per a customer order, terms FOB destination, and another 70 units out on consignment to a friend who owns a retail store. How many units should Jenny include in her company's period-end inventory
1500+250+70-30=1790
A car dealer acquires a used car for $3,000, terms FOB shipping point. Additional costs in obtaining and offering the car for sale include $150 for transportation-in, $200 for import duties, $50 for insurance during shipment, $25 for advertising, and $250 for sales staff salaries. For computing inventory, what cost is assigned to the used car?
3000+150+200+50=3400 no sales ad or staff salaries
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COGS / Avg Inv. = Inv. Turnover (200,000 + 230,000) / 2 = 215,000 avg. inv. 1,600,000 / 215,000 = 7.44 Days' sales in inventory=Ending Inventory/Costs of goods sold × 365 =($230,000 / $1,600,000) × 365 = 52.47 days
Specific identification is the preferred method when each unit of product has unique features that markedly affect cost.
Seven were sold from Dec 7 purchase and 11 sold from Dec 14. That leaves 3@$9 + 9@$10 + 15@$12 = $297
Units available for sale_
add up all units
Cost of goods available for sale
add up all units*the cost
FIFO-results in a balance sheet inventory amount approximating replacement cost.
jan 1st 320 units@ 6.00 - 320 = 0 jan 9nth 85 [email protected] - 40 = 45units@$6.40 = $288.00 jan 25th 110 units@ 6.60 = 110units @$6.60 = $726.00 jan 31st 45units@$6.40 = $288.00 ______110units @$6.60 = $726.00 When we sell 18 units, we first use up all 10 units bought on Dec 7 and we use up 8 units bought on Dec 14 So our ending inventory is 12 units bought on Dec 14 15 units bought on Dec 21 Ending Inventory Cost = (12 x 10) + (15 x 12) = $300
LIFO-yields a balance sheet inventory amount often markedly less than its replacement cost,provides a tax advantage (deferral) to a corporation when costs are rising, matches recent costs against net sales.
jan 1st 320 units@ 6.00 = (360 - 195) -->165 x 6.00 = $990. jan 9nth 85 [email protected] =$544 jan 25th 110 units@ 6.60 =$726 jan 31st 155 units@ 6.00 = $930. Sold all last units now add up all remaining units*cost
Weight Average
you multiply the value times how many you have, to get a total value. Add up all those total values and divide by how many you have. For instance: 100 @ $10 = $1000 120 @ $11 = $1320 So you have total dollar value of $2320 and total units of 220. So $2320/220 = $10.55 average. i.e. you've averaged all 220 of the units, not just $10 & $11. Weighted average is trickier. When the first two purchases were made, it came out to a total cost of $290 for 30 units. This comes out to about $9.67 per unit. Eighteen units were sold leaving 12 units at a total cost of $116. Add to that the $180 purchased on Dec 21, and you have an ending inventory of $296