Thinking about Cost of Goods Manufactured v2

Thinking about Cost of Goods Manufactured v2 - Thinking...

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Thinking about Cost of Goods Manufactured and the relationship of costs and revenue. There are a couple off areas in the cost of goods manufactured where students sometimes find difficulty. Here is a brief discussion to try to help out: Beginning Inventory . When we start a year, we need information on what the previous year data is (the Balance sheet information). Balance sheet data does not change as we move from one accounting period to the next. Therefore, the ending inventory in one period, one month, one quarter, or whatever your time measurement is, is the same as the beginning inventory for the next period. Think about a basic concept of cash. If we have $100 in cash at the end of March, we should have the same amount on the first of April. So, during the year, we always know beginning inventories, if we know the data from the previous accounting period. Many of the budgets used in the Master Budget use the concept of previous balance
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Thinking about Cost of Goods Manufactured v2 - Thinking...

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