Chapter 18 Inventory and Overhead

Chapter 18 Inventory and Overhead

1. Specific identification method: they can identify the original purchase cost of an item with the item.

   • Formula: step one calculate the cost of goods step two calculate the cost of ending inventory step three calculate the cost of goods sold *Subtract*(step 1- step 2)

2. The weighted average method: is the ending inventory by using an average unit cost.

   • FORMULA: step 1: list the units to be included in the ending inventory in their cost. Step 2: calculate the cost of the ending inventory. Step 3: calculate the cost of goods sold

3. First in first out (FIFO) inventory valuation method assumes that the first goods brought into the store are the first goods sold

4. Last In, Last Out (LIFO) is a method of inventory valuation then the goods sold will be the last goods brought into the store. The ending inventory would consist of the old goods bought earlier.

   • Formula: Step 1 list the units to be included in the ending inventory in their cost Step 2 calculate the cost of the ending inventory Step 3 calculate the cost of goods sold.

5. Distribution Overhead cost

   • Step 1: calculate the total square feet in all departments. Step 2: calculate the ratio for each department based on floor space Step 3: multiply each department's floor space ratio by the total overhead.

6. Retail Method:Estimating Inventory

Bilder und Dateien der Mindmap

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• Learning Unit 18-2 Video (Einbetten)