Ads
related to: actual cost method inventory- What Is The Average Cost?
Accept Online Payments Of Any Type
Protect Your Business Today
- POS For Small Businesses
POS Systems For Your Business
For Cheaper Than You Think.
- Cash Register Rental
The 5 Best POS Suppliers in the USA
POS Suppliers For Your Business
- Rental From $24.99/Month
The Best Option To Spread Your Cost
Or To Test A New POS System.
- Restaurant Cash Registers
The Best Restaurant POS Systems
Get Deals For Your Business!
- Top POS Providers Costs
Latest POS System Deals
Protect Your Business Today
- What Is The Average Cost?
Search results
Results From The WOW.Com Content Network
The average cost is computed by dividing the total cost of goods available for sale by the total units available for sale. This gives a weighted-average unit cost that is applied to the units in the ending inventory. There are two commonly used average cost methods: Simple weighted-average cost method and perpetual weighted-average cost method. [2]
This method is also very hard to use on interchangeable goods. For example, relating shipping and storage costs to a specific inventory item becomes difficult. These numbers often need to be estimated, diminishing the specificity advantage of the specific identification method.
Two very popular methods are 1)- retail inventory method, and 2)- gross profit (or gross margin) method. The retail inventory method uses a cost to retail price ratio. The physical inventory is valued at retail, and it is multiplied by the cost ratio (or percentage) to determine the estimated cost of the ending inventory. The gross profit ...
If she uses FIFO, her costs are 20 (10+10). If she uses average cost, her costs are 22 ( (10+10+12+12)/4 x 2). If she uses LIFO, her costs are 24 (12+12). Thus, her profit for accounting and tax purposes may be 20, 18, or 16, depending on her inventory method. After the sales, her inventory values are either 20, 22 or 24.
Unfortunately, standard cost accounting methods developed about 100 years ago, when labor comprised the most important cost in manufactured goods. Standard methods continue to emphasize labor efficiency even though that resource now constitutes a (very) small part of cost in most cases.
In other words, the cost associated with the inventory that was purchased first is the cost expensed first. A company might use the LIFO method for accounting purposes, even if it uses FIFO for inventory management purposes (i.e., for the actual storage, shelving, and sale
Ads
related to: actual cost method inventoryquotes.expertmarket.com has been visited by 100K+ users in the past month
getmaintainx.com has been visited by 10K+ users in the past month