Chapter 8 Summary

Chapter 8 Summary - Chapter 8 1) Describe inventory...

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Chapter 8 1) Describe inventory management goals a) Make or buy a sufficient quantity, of quality and innovative products at the lowest possible cost b) Minimize the costs of obtaining and carrying inventory (purchasing, production, storage, spoilage, theft, obsolescence, and financing) while avoiding stock-outs that mean lost sales revenue and decreases in customer satisfaction 2) Describe the different types of inventory a) Inventory is initially recorded at cost, which includes all amounts given up to acquire the asset and bring it into a condition and location ready for sale. b) When raw materials enter the production process, they become work in process inventory, which is further transformed into finished goods that are ultimately sold to customers. Merchandise inventory is bought in a ready to sell format. 3) Compute costs using four inventory costing methods a) Any of four generally accepted methods can be used to allocate the cost of inventory available for sale between goods that are sold and goods that remain on hand at the end of the accounting period. b) Specific identification assigns costs to ending inventory and cost of goods sold by tracking and identifying each specific item of inventory. c)
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This note was uploaded on 04/14/2008 for the course ACC 2361 taught by Professor Steverson during the Spring '08 term at Texas State.

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Chapter 8 Summary - Chapter 8 1) Describe inventory...

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