Chapter 7

Chapter 7 - 9 Average cost method COGS of units available...

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Chapter 7 1. Goals of inventory management: provide sufficient quantities of high-quality inventory and minimize cost of carrying too much inventory. 2. The cost principle requires that inventory be recorded at the price paid or the consideration given: invoice price, freight, inspection costs, preparation costs 3. Page 136 slide 3!!! 4. Page 137 slide 1!!! 5. Inventory costing method: Specific Identification, Weighted Average, FIFO, LIFO. 6. Total dollar amount of goods available for sale inventory costing method ending inventory, COGS 7. FIFO a. Oldest cost COGS b. Recent cost ending inventory c. Ending inventory approximates current replacement lost 8. LIFO a. Oldest cost Ending inventory b. Recent cost COGS c. Better matches current costs in cost of goods sold with revenues.
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Unformatted text preview: 9. Average cost method: COGS/ # of units available for sale 10. Managers choose inventory methods for a. Net income effects – report higher earnings for their company b. Income tax effects – managers prefer to pay the least amount of taxes as possible 11. Inventory turnover = COGS/inventory .reflect how many times average inventory was produced and sold during a period. 12. Page 149 slide 1!! 13. Perpetual system: Provides up-to-date inventory records, provides up-to-date cost of sales record. 14. Page 149 slide 3!! 15. Page 150 slide 1!! 16. LIFO liquidation – when a LIFO company sells more inventory than it purchases, items from beginning inventory become part of COGS...
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Chapter 7 - 9 Average cost method COGS of units available...

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