MicroLecture Cost of Inventory - Cost flow assumptions...

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1 Cost flow assumptions Inventory Part 1 What is the relationship between ending inventory and Cost of Goods Sold? What is the relationship between ending inventory and Cost of Goods Sold? Beginning Inventory + Inventory added in period Cost of Goods Available for Sale
What is the relationship between ending inventory and Cost of Goods Sold?
What is the relationship between ending inventory and Cost of Goods Sold? 10 11 12 16 17 18
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Go with the flow What is meant by the term cost flow assumption? The assumption about which goods were sold and which goods remain in ending inventory. First things first What are the underlying assumptions of the First-in, first-out (FIFO) cost flow assumption? Oldest inventory is sold first At Last What are the underlying assumptions of the Last-in, first-out (LIFO) cost flow assumption?
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4 More practice Date # of units Cost per unit Beginning 80 10 1/10 100 11 3/8 50 12 7/23 380 16 9/3 150 17 12/18 200 18 Company sold 850 units during the year FIFO Cost of Goods Sold FIFO Cost of Goods Sold
5 FIFO Cost of Goods Sold FIFO Cost of Goods Sold 11,130 FIFO Cost of Goods Sold 11,130 + (90 x 18) =
6 FIFO Cost of Goods Sold 11,130 + (90 x 18) = FIFO Cost of Goods Sold 11,130 + (90 x 18) = 12,750 FIFO Ending Inventory
7 FIFO Ending Inventory 110 FIFO Ending Inventory 110 x 18 FIFO Ending Inventory

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