Cost Valuation Systems: Inventory and Costs of Goods Sold

Related BrainMass Solutions

• This post addresses inventory valuation and net income.

  If the company uses a first-in-first-out method and inventory costs are increasing, this will decrease the cost of goods sold because inventory costs have increased. This results in a lower net income.

• Gross Profit and Ending Inventory FIFO and LIFO

  300,000 FIFO Inventory valuation Gross profit Sales 17,000 $340,000 Less: Cost of goods sold $252,000 Gross profit $88,000 Ending inventory 3,000 $48,000 Cost of goods

• Do you think it is necessary to have as many different valuation and flow assumptions as we have? Why or why not?

  In FIFO method ending inventory and cost of goods sold is calculated in the following manner. It is assumed that inventory sold on Jan 20 is assigned the costs as under.

• Inventory Valuation and the Effect on Profit.

  Inventory valuation methods impact the valuation of inventory and the cost of goods sold. There by it affects the balance sheet, income statement and statement of cash flow.

• Approach for Entities to Use in Terms of Inventory Management

  In FIFO method ending inventory and cost of goods sold is calculated in the following manner.

• Summit Systems, Inc: Variable vs Absorption costing

  In times of decreasing inventories, some of the deferred fixed overhead costs will be released from inventory to flow to cost of goods sold. This will decrease net income. Presumption of FIFO again. 3.

• Inventory Valuation and FIFO, LIFO, Weighted-Average

  Solution assists in Inventory Valuation and FIFO, LIFO, Weighted-Average

• VALUATION OF CLOSING INVENTORY under various methods

  IS BASED ON THE CONCEPT LAST IN FIRST OUT AND ALSO THE GOODS PURCHASED LAST AT HIGHER PRICE, THUS IT WILL BE PART OF COST OF GOODS SOLD] AVERAGE UNIT COST METHOD(WEIGHTED AVERAGE METHOD) VALUATION OF CLOSING INVENTORY

• Craig Company: Inventoriable Costs, Error Adjustments, inventory balance

  excluded from Inventory Cost of Goods sold 10438 Inventory 10438 7 Sale of merchandise on f.o.b.shipping -10520 Goods sold and dispatched f.o.b.shipping.Ownership is transferred though goods