Ch. 18 - Inventory and Overhead

Ch. 18 - Inventory and Overhead

1. Specific Identification Method

   • 1. Calculate Cost of Goods. 2. Calculate Cost of Ending Inventory. 3. Calculate Cost of Goods Sold (Step 1 - Step 2)

2. Weighted Average Method

   • 1. Calculate the aerage unit cost. 2. Calculate the cost of the ending inventory. 3. Calculate the cost of goods sold.

3. FIFO - First In, First Out Method

   • LIFO - Last In, Last Out Method

4. Gross Profit Method

   • Retail Method

5. Inventory Turnover

   • Inv. Turnover at retail = Net Sales / Avg Inv. at retail
   • Inv. Turnover at cost = Cost of Goods Sold / Avg. Inv. at cost
   • Average Inventory = Beg. Inv. + End. Inv. / 2

6. Distribution of Overhead

   • Floor Space
     • 1. Calculate total square feet. 2. Calculate ratio for each department. 3. Multiply each dept. floor space ration by total overhead.
   • Sales
     • 1. Calculate total sales. 2. Calculate the ratio for each department based on sales. 3. Multiply each departments sales ratio by ototal overhead.