MGAB01H3 Chapter : Inventory Cost Flow Methods in Perpetual Inventory Systems
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MGAB01H3 Full Course Notes
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Inventory cost flow methods in perpetual inventory systems. All methods of cost flow can be used in the perpetual inventory system. The results under fifo in a perpetual system are the same as in a periodic system. Regardless of the system, the first costs in are the ones assigned to cost of goods sold. This is called moving average cost method in perpetual inventory system. The average cost is calculated in the same method, however it is calculated for every purchase or sale of merchandise, thus, constantly changing the average. The results under lifo in a perpetual system differ to the periodic system. To save time from physically counting inventory, the gross profit method and the retail inventory method can be used to estimate. Net sales estimated gross profit = estimated cost of goods sold. Cost of goods available for sale estimated cost of goods sold = estimated cost of ending inventory.
