Inventory Costing Methods: Reported By: Joanne Oliva
Inventory Costing Methods: Reported By: Joanne Oliva
Inventory Costing Methods: Reported By: Joanne Oliva
Methods
Reported By: Joanne Oliva
Inventory Costing Methods
1. Specific Identification
2. Average Cost
150 units were sold. If the merchant selected the 100 units with
a unit cost of $8 and 50 units having a unit cost of $9, the cost
of goods sold would be (100 x $8)+(50
o x $9) = $1,250.00.
If the units with the higher cost were selected, the cost of goods
sold would be (80 x $10) + (60 x $9) = $1,420.00
Inventory Costing Methods
The average cost of goods available for sale
is computed, and the units in both cost of
Average goods sold and ending inventory are costed
Cost at this average cost.
Method
Refer to Sample 3
o
Inventory Costing Methods
It is the opposite of FIFO method. Cost of
goods sold is based on the cost of the most
Last-in, recent purchases, and ending inventory is
Last-Out costed at the cost of the oldest units
(LIFO) available.
Method
Refer to Sample 4
o
Inventory Costing Methods
LIFO Dollar Value Method
Last-in, In this method, items whose prices tend to
move together are grouped into an inventory
Last-Out
pool.
(LIFO)
Compared unit by unit LIFO method, LIFO
Method Dollar Value saves a considerable amount of
record keeping effort
Ex. A pool may consist of all the items in the inventory of the
house wares department in a store. The calculations required to
determine cost of goods sold ando inventory amounts.
Inventory Costing Methods
LIFO Reserved
Last-in, At the end of the accounting period, the
difference between LIFO valuation and the
Last-Out
FIFO or average cost valuation is determined.
(LIFO)
It is nothing more than the difference
Method between two inventory amount, based on
LIFO and on different method in of valuing
inventory.
LIFO Reserve = FIFO Inventory – LIFO Inventory
Same as;
o
LIFO Reserve = LIFO Cogs – FIFO Cogs
Refer to Sample 5
Methods of Comparison