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Chapter 18

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1Specific identification methodThis method calculates the cost of ending inventory by identifying each item remaining to invoice price, 478–479.
2Weighted-average methodCalculates the cost of ending inventory by applying an average unit cost to items remaining in inventory for that period of time, 479–480, 482.
3First-in, first-out (FIFO) methodThis method assumes the first inventory brought into the store will be the first sold. Ending inventory is made up of goods most recently purchased, 480, 482.
4Last-in, first-out (LIFO) methodThis method assumes the last inventory brought into the store will be the first sold. Ending inventory is made up of the oldest goods purchased, 481–482.
5Retail methodMethod to estimate cost of ending inventory. The cost ratio times ending inventory at retail equals the ending cost of inventory, 483.
6Gross profit methodUsed to estimate value of inventory, 484.
7Inventory turnoverRatio that indicates how quickly inventory turns:
8Average inventoryTotal of all inventories divided by number of times inventory taken, 484.
9Just-in-time (JIT) inventory systemSystem that eliminates inventories. Suppliers provide materials daily as manufacturing company needs them, 485.
10Overhead expensesOperating expenses not directly associated with a specific department or product, 216, 485.
11Distribution of overheadCompanies distribute overhead by floor space or sales volume, 485–486.