ACCT 203 Lecture Notes - Lecture 8: Inventory Turnover, Perpetual Inventory, Cost Accounting
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22 May 2018
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GMU ACCOUNTING 203 Lecture 8
Value Chain
Refers to the series of activities that add value to a company's products or
services.
Raw materials inventory turnover ratio
Raw materials used
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average raw materials inventory
Days' sales in raw materials inventory
Reveals how much raw materials inventory is available in terms of the number of
days' sales.
Days' sales in raw materials inventory ratio formula:
Ending raw materials inventory
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raw materials used X 365
Cost accounting system
Records manufacturing activities using a perpetual inventory system, which
continuously updates records for costs of materials, goods in process, and
finished goods inventories. A cost accounting system also provides timely
information about inventories and manufacturing costs per unit of product.
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Sales | $ | 643,000 |
Direct labor cost | $ | 90,000 |
Raw material purchases | $ | 132,000 |
Selling expenses | $ | 100,000 |
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Manufacturing overhead applied to work inprocess | $ | 210,000 |
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