BUS 201 Study Guide - Final Guide: Weighted Arithmetic Mean, Purch Group, Income Statement
Document Summary
Problem #5 using weighted average purchase price varied. Assumes all items have the same costs. Fifo- first in first out, last in still here (work from the bottom up) Accurate approximation method when items are small-dollar items where. Weighted- average -total cost of goods available for sale/ total units available for sale= weighted average cost per unit. Weighted average cost per unit x units in ending inventory = cost of ending inventory. Cost of goods available for sale ending inventory (weighted average)= cogs. Cost of goods available for sale ending inventory using fifo = cogs using fifo. Does not reflect natural flow of goods: only used if inventory cots are constantly rising, distorts balance sheet obsolescence, damage, etc. Lifo- last in first out, first in still here (work from the top down) Lower of cost to write down value of inventory & recognize losses due to still there.
