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MGCR 211 Chapter 7.docx

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Management Core
MGCR 211
Karen Zajdman- Borden

MGCR 211 Chapter 7 3/7/2012 7:02:00 AM I. Two Systems for keeping track of inventory A. Periodic B. Perpetual II. How to cost inventory A. First In First Out (fifo) 1. Fifo perpetual a. Cost of Goods sold i. Opening inventory ii. + All purchases for year iii. Goods available for sale iv. – Ending inventory v. CGS B. Average 1. Moving Average a. Cost of Goods Sold i. Opening Inventory (1,000) ii. + Purchases (9,250) . iii. Goods Available (10,250) iv. – Ending Inventory (-4,855) v. Cost of Goods Sold (5,395) C. Specific Identification III. Example: Mathew Electronics A. Fifo Perpetual 1. Cost of Goods sold a. Opening inventory (1,000) b. + All purchases for year (9,250) c. Goods available for sale (10,250) d. – Ending inventory (-5,250) e. CGS (5,000) B. Fifo Periodic 1. Ending Inventory: a. 400 Remain b. 100 x 14 = 1,400 c. 250 x 13 = 3,250 d. 50 x 12 = 600 e. Ending Inventory =5,250 2. Same formula as perpetual after this C. Moving Average, Perpetual 1. Take total cost / total goods available for sale 2. Avg moves when new purchases are made / items are sold. 3. Cost of Goods Sold a. Opening Inventory (1,000) b. + Purchases (9,250) . c. Goods Available (10,250) d. – Ending Inventory (-4,855) e. Cost of Goods Sold (5,395) D. Average Cost, Periodic 1. Only update records at the end of the year 2. Ending inventory x Avg Cost a. 400 x $12.06 = $4,824 3. Ending inventory = Open Inventory + Purchases – Sales. = 400 units 4. Avg Cost = Total goo
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