■ What is the relationship between ending inventory and...

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Announcements Midterm II exam: Monday, 7/1 Optional exam review session Date: Friday, 6/28 Venue and time: TBD Must e-mail for seat by Thursday, 6/27 Inventory and COGS What is inventory Inventories are assets of a company that are: held for sale to customers in the ordinary course of business. in the process of production for sale. held for use in the production of goods or services to be made available for sale. Manufactured Inventory vs. Merchandise Inventory Based on definition of inventory, what are the categories of manufactured inventory? Finished goods Work-in-process Raw materials What are the categories of merchandising inventory? Finished goods
Inventory and COGS What is the relationship between ending inventory and Cost of Goods Sold? COGS Model
What is the difference between a What is the difference between variable
product cost and a period cost? and absorption costing?
What are variable costs?
What’s in inventory?
What are some examples of common manufacturing costs? What is the difference between a perpetual and a periodic inventory system? Raw materials Direct labor Overhead-Indirect labor Other overhead (rental of facilities, depreciation of production equipment, property taxes) Perpetual- inventory is updated at the time that inventory purchases are made Periodic- inventory is updated at the end of a reporting period via a physical count of the inventory JEs: Flow of inventory costs We’re talkin’ about practice! Raw materials Work in Process Finished Goods Beginning Inventory 250,000 180,000 210,000 Ending Inventory 270,000 205,000 280,000 During the year, Purchased $450,000 of raw materials; incurred $280,000 in direct labor costs; incurred $160,000 in overhead. Compute COGS for year.
Units and cost flow relationship 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.

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