Phillips Chap 7 class slides

Phillips Chap 7 class slides - Inventory Management Ensure...

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Inventory Management Ensure sufficient quantities of inventory are available to meet customer’s needs, Ensure inventory quality meets customers’ expectations and company standards, and minimize the costs of acquiring and carrying inventory
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Inventory goods are held for sale in the normal course of business, or used to produce goods for sale. Inventory is reported on the balance Inventory is reported on the balance sheet as a current asset because it sheet as a current asset because it normally is used or converted into normally is used or converted into cash within one year. cash within one year.
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Merchandiser Manufacturer Inventory Inventory is acquired in a finished condition and is ready for sale. Raw materials Raw materials materials that are processed further into finished goods. Work in process Work in process goods that are in the process of being manufactured. Finished goods Finished goods goods that are
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Beginning Inventory $30,000 $30,000 Purchases $70,000 $70,000 Goods Available for Sale $100,000 $100,000 + + Ending Inventory $25,000 $25,000 Still Here Cost of Goods Sold $75,000 $75,000 Sold
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Beginning inventory 30,000 $ + Purchases of merchandise during the period 70,000 = Cost of goods available for sale 100,000 Ending inventory 25,000 = Cost of goods sold 75,000 $ Schedule of Cost of Goods Sold
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Inventory Costing Methods First-in, first-out (FIFO) Last-in, first-out (LIFO) Weighted Average Specific Identification
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Inventory Costing Illustration Cost of Goods Available for Sale Cost per Total Units Unit Cost 8/1 Beg. Inventory 10 91 $ 8/3 Purchase 15 106 8/17 Purchase 20 115 8/28 Purchase 10 119 Total units available Selling Total Retail Sales of Goods Units Price Revenue 8/14 Sale 20 130 $ 8/31 Sale 23 150 Total units sold Units in ending inventory HandHeld Inc. – August PDA Info
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Inventory Costing Illustration Cost of Goods Available for Sale Cost per Total Units Unit Cost 8/1 Beg. Inventory 10 91 $ 910 $ 8/3 Purchase 15 106 1,590 8/17 Purchase 20 115 2,300 8/28 Purchase 10 119 1,190 Total units available 55 5,990 Selling Total Retail Sales of Goods Units Price Revenue 8/14 Sale 20 130 $ 2,600 $ 8/31 Sale 23 150 3,450 Total units sold 43 6,050 Units in ending inventory 12
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First-In, First-Out (FIFO) Cost of Goods Sold Ending Inventory Oldest Costs Recent Costs
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First-In, First-Out (FIFO) - Periodic Cost of ending inventory Cost per Total Units Unit Cost 8/28 Purchase 10 119 $ 8/17 Purchase 2 115 Total cost 12 Cost per Total CGS Units Unit Cost 8/1 Beg Balance 10 91 $ 8/3 Purchase 15 106 $ 8/3 Purchase 18 115 8/17 Total units sold 43
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First-In, First-Out (FIFO) - Periodic Cost of ending inventory Cost per Total Units Unit Cost 8/28 Purchase 10 119 $ 1,190 $ 8/17 Purchase 2 115 230 Total cost 12 1,420 Cost per Total CGS Units Unit Cost 8/1 Beg Balance 10 91 $ 910 $ 8/3 Purchase 15 106 $ 1,590 $ 8/3 Purchase 18 115 2,070 8/17 Total units sold 43 115 4,570
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Inventory Date Units Costs Total Units Cost Total Balance Aug. 1
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This note was uploaded on 04/30/2011 for the course MBA 819 taught by Professor Mcmillan during the Fall '10 term at Clemson.

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Phillips Chap 7 class slides - Inventory Management Ensure...

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