Transportation to consigee is part of?
The cost for inventory which also includes fright- ins etc.
The dollar value LIFO adjust inventory retail prices and ending inventory cost for?
Price level changes.
From FIFO to LIFO Net income and ending inventory?
BOTH decreases!
Interest to finance construction of machine for own used is
CAP as part of cost mechanism, it is not an interest expense.
Beg inventory US 26, end inventory OS 52, then COGS is?
US by 78000 —-
-26-COGS=52
COGS =-78000
Using lower of cost or market apply to each item separately in order to?
Get the lowest inventory amount.
LIFO reserve is
The difference between inventory on the LIFO method vs any other cost method.
Weighted Average Method: Periodic
Total cost/total unit purchased= cost per unit
Moving Average Method– Perpetual system
Compute new weighted average after each purchase.
Merchandise out on consignment, at sales price, including 40% mark up on selling price of ¥40000 means
The 40% markup is not part of your inventory. So (.40)(40K)=16K is not yours. 40-16= 24 only 24 is yours.
Disadvantage of periodic inventory is that COGS use for financial reporting includes
Cost of inventory sold and inventory shortages.
Gross margin%=
Rev-COGS/Rev
Overstatement of ending inventory will overstate gross profit because
OS of end inventory understated COGS which will Overstate gross profit.
Net realizable value is the ceiling but net carrying value is
The lower of cost or market!!! Tricky don’t get it mixed up!!!
Insurance cost during transit of purchased goods is part of the
Cost of inventory
Shipping cost = 1.5
Purchased =12
End inventory= 3
How much shipping cost is for end inventory?
(1.5/12)=(x/3)
x = .375 or 375,000
Create a liability of the expected or accrued loss when
The price you paid is less then the FMV
US of asset or ending inventory =
OS of COGS, which will
Understate net income and retained earnings.
Which inventory costing method will produce a lower inventory turnover ratio during inflation?
FIFO, BC inventory turnover = COGS/avg inventory … So we want a lower COGS so we used FIFO
When calculating net profit on a consigned transaction remember that the profit is based on the percentage of the inventory sold… Don’t forgot
That sales were on 2/3 of inventory you only include 2/3 inventory cost of COGS and also 2/3 of freight cost… BUT use full amount of advertising cost.
Sewage system is not land cost
It is land improvement!
Interest on loan to buy land is expensed unless
It is discrete manufacturing activity .
Aging the receivables
Focus on BS, and valuation of assets.
Good matching and expense method.
Which costing method most closely current cost
LIFO for cost of goods sold
FIFO for ending inventory
