# Determine The Inventory Cost By The Weighted Average Cost Method Inventory Costing

You are searching about Determine The Inventory Cost By The Weighted Average Cost Method, today we will share with you article about Determine The Inventory Cost By The Weighted Average Cost Method was compiled and edited by our team from many sources on the internet. Hope this article on the topic Determine The Inventory Cost By The Weighted Average Cost Method is useful to you.

Page Contents

## Inventory Costing

There are several ways to determine the value of your inventory and each type of appraisal has advantages. The most common type used by small businesses is average cost or weighted average cost. This is based on the average price of the same unit. Using the total cost of goods sold divided by the number of units available for sale can result in a different average cost. Multiplying the weighted average cost by the number of unsold units gives you your inventory value.

First-In, First-Out Costing (FIFO) assumes that the first goods purchased are the first goods sold and therefore the last goods purchased are those remaining in inventory. This system is often used because whenever the flow of inventory can be controlled it makes sense that the oldest items are sold first satisfying the accounting convention that the inventory should be shown in the balance at the last cost can be done. Since this method has been used for a long time, its continued use ensures consistency in comparing income calculations.

Last-In, First-Out Costing (LIFO) assumes that the most recent purchases are sold first, leaving the oldest items in inventory. One argument for using this method is to match the current cost of goods purchased with current sales revenue. As prices also rise, the income calculated using this method is less than the amount determined using other methods and results in less tax. It will reverse if the price goes down.

Another method, although less common, is the value of specific identification which requires that each item sold and each item left in the inventory be specified with respect to its purchase price. This method is not applicable to most companies. Companies that sell items that are relatively expensive, with a low number of sales and easy to identify the cost and sales price of each item may benefit from this method.

When choosing a method, consider the practical issues of how the valuation can be done accurately and with the least amount of effort, and be sure to consult your tax preparer with regard to returns. taxes.

## Question about Determine The Inventory Cost By The Weighted Average Cost Method

If you have any questions about Determine The Inventory Cost By The Weighted Average Cost Method, please let us know, all your questions or suggestions will help us improve in the following articles!

The article Determine The Inventory Cost By The Weighted Average Cost Method was compiled by me and my team from many sources. If you find the article Determine The Inventory Cost By The Weighted Average Cost Method helpful to you, please support the team Like or Share!

Rate: 4-5 stars
Ratings: 7221
Views: 71438350

## Search keywords Determine The Inventory Cost By The Weighted Average Cost Method

Determine The Inventory Cost By The Weighted Average Cost Method
way Determine The Inventory Cost By The Weighted Average Cost Method
tutorial Determine The Inventory Cost By The Weighted Average Cost Method
Determine The Inventory Cost By The Weighted Average Cost Method free
#Inventory #Costing

Source: https://ezinearticles.com/?Inventory-Costing&id=249699

### Related Posts ## Cost Of Funding Index And Weighted Average Cost Of Capital How to Get More Than 4% Interest on Your Savings Account

You are searching about Cost Of Funding Index And Weighted Average Cost Of Capital, today we will share with you article about Cost Of Funding Index And… ## Computing Weight Average Number Of Common Shares Comparative Income Statement Financial Statement Analysis for Sales and Marketing Executives

You are searching about Computing Weight Average Number Of Common Shares Comparative Income Statement, today we will share with you article about Computing Weight Average Number Of… ## Compute The Cost Assigned To Ending Inventory Using Weighted Average. Aggregate Inventory Management

You are searching about Compute The Cost Assigned To Ending Inventory Using Weighted Average., today we will share with you article about Compute The Cost Assigned To… ## Can Be Critical Pressures Be Calculated As A Weighted Average Comparing and Contrasting GAAP and IFRS

You are searching about Can Be Critical Pressures Be Calculated As A Weighted Average, today we will share with you article about Can Be Critical Pressures Be… ## Calculate Weighted Average Cost Of Capital Using Book Value Method Buying a Business With Its Own Cash – And Not a Penny of Your Own

You are searching about Calculate Weighted Average Cost Of Capital Using Book Value Method, today we will share with you article about Calculate Weighted Average Cost Of… ## Book Value And Market Value Weighted Average Cost Of Capital Developing Self-Discipline For Starting Your Own Business

You are searching about Book Value And Market Value Weighted Average Cost Of Capital, today we will share with you article about Book Value And Market Value…