Beginning Direct Materials
Add: Materials purchased during period
Less: Materials Used during period
Equals: Ending Direct Materials
Total material consumed amount is used for prime cost not opening inventory or ending inventory only.
ending inventory
An overstatement of ending inventory in one period results in
LIFO Reserve
goods available for sales = beginning inventory + net purchases. So net purchases = 6000 Goods available for sale - ending inventory = COGS So ending inventory = 7000
Total material consumed amount is used for prime cost not opening inventory or ending inventory only.
beginning work in process + requisted for manufacturing ( direct material + direct labor + man. overhead ) = cost of goods completed + ending work in process
Costs of goods sold are a type of expense and although the total may vary between the accrual and cash basis' of accounting, the method of calculating them is the same. Beginning Inventory + Purchases - Ending Inventory = Costs of Goods Sold. If you have no beginning or ending inventory (because you're using the cash basis)... you just add the purchases and applicable expenses. Some of which might be: direct materials and supplies, energy costs, freight, direct labor costs, etc.
This is a very simple calculation. Days to Sell Inventory(or Days in Inventory) = Average Inventory / Annual Cost of Goods Sold /365 Average Inventory = (Beginning Inventory + Ending Inventory) / 2 To calculate this ratio for a quarter instead of a year use the following variation: Days to Sell Inventory (or Days in Inventory) = Average Inventory / "Quarterly" Cost of Goods Sold /"90" Average Inventory = (Beginning Inventory + Ending Inventory) / 2
ending inventory
In the sense of finding the STR for marketing/research purposes: Stock Turn Rate = Cost of Goods Sold/Average Inventory Average Inventory = Beg. Inventory + Ending Inventory = X then.. X/2
An overstatement of ending inventory in one period results in
It is ok with there is no opening or closing inventory in that case where company is starting business first month and also there would be no beginning inventory if in last month there were no closing inventory in that case purchases are considered as cost of goods sold.
LIFO Reserve
inventory turnover ratio==cogs/average inventory average inventory=opening inventory + closing inventory/2 average inventory =4500+5500/2 =5000 inventory turnover ratio = 20000/5000 = 4
Open to buy is a method of planning and controlling retail inventory. Calculate your opening inventory balance (in units or dollars), add the in-coming (already ordered) inventory and subtract your projected sales for the period...then compare that number to your desired ending inventory amount...the difference is how much you are open to buy (inventory that should be ordered). So if you start with 100,000 and have 10,000 on order and expect sales to be 40,000 and you want your ending inventory to be 90,000...You are open to buy 20,000 90- (100 + 10 - 40) = 20
goods available for sales = beginning inventory + net purchases. So net purchases = 6000 Goods available for sale - ending inventory = COGS So ending inventory = 7000