Flashcards in Inventory Deck (22)
What is the basic inventory formula?
BI + Net P = EI + COGS
What is the formula for Inventory Turnover Ratio?
ITO = COGS / Avg Inv
What is the formula for determining allocated costs?
Total cost x the fraction allocated to the particular asset.
Is freight in an inventoriable cost?
Is warehousing an inventoriable cost?
Is freight out an inventoriable cost?
How do you determine LCM?
First determine market price. (Middle value of NRV (SP-DC), RC, and NRV-GM = MP). Then compare it to cost. LCM is the lower of the market price vs the cost.
As dollar value LIFO layers are added, increases at the base year costs are restated using the price index in effect at the time each layer was added. TF
Dollar value LIFO inventory costs are cumulative. TF
When progress billings are sent (dealing with construction projects) revenue is credited. TF
False. The contra account to CIP named BCIP is credited.
COGS Available for Sale =
BI + Net P
In a period of rising prices, which inventory method will result in the highest COGS?
In a period of rising prices, which inventory method will result in the highest NI?
FIFO, due to creating the lowest COGS.
The double extension and chain link methods refer to what inventory cost flow method?
Dollar value LIFO
What is the formula for # of days supply in average inventory?
Average Inventory at cost / Average sales per day at Cost
Goods held on consignment are included in inventory. TF
Goods out on consignment are included in inventory. TF
FOB Shipping Point means...
The title transfers to the buyer at the shipping point.
FOB Destination means...
The title transfers to the buyer when its item arrives
Using the % of completion method, calculation of income for a period is the ___ costs incurred to date / the ____ estimated costs.
WA of inventory = Total cost of inventory / Total ____ of inventory.