StudentShare solutions
Got a tricky question? Receive an answer from students like you! Try us!

Essay example - Managerial cost

Only on StudentShare
Pages 2 (502 words)
Three mostly used methods of stock valuation are FIFO, AVERAGE COST, and LIFO. FIFO stands for first- in, first out. Under FIFO, the prices or price at which units were more recently purchased are assigned to ending inventory. As a result, ending inventory valued under FIFO most closely approximate current cost…

Extract of sample

Under Average cost method, an average cost is calculated for all units, and this average cost is assigned to all the units remaining in ending inventory and cost of sales for units sold. 'To determine average cost, divide the total number of units available for sale into the total purchase cost for the period of time under examination.'(James o Gill, Moria Chatton, page 46)2 For a company using periodic inventory system, the method is referred to weighted average; and where a perpetual inventory system is in use, this method is called moving average method. As costs are averaged out before applying to ending inventory, the material costs under inflation is not very near to market prices but a lower than that because of the effect of earlier purchases in averaging out.
LIFO means last in first out and under this method the prices at which merchandise was most recently purchased are used to determine the amounts charged to cost of goods sold. LIFO assumes that 'goods are all the same and interchangeable.'(Peter J Eisen, page 322)3 Ending inventory is valued using the prices associated with the units acquired the earliest. As a result, cost of goods sold computed under LIFO most closely approximate current cost. During inflation LIFO will result in lowest value for ending inventory and highest amount of goods sold and the lowest amount gross profits and net income.
The person requesting the goods p ...
Download paper
Not exactly what you need?

Related papers

Cost (Management) Accounting Adds Value to an Entity
Vanderback)i Cost or managerial accounting is modern day useful accounting technology that helps departments of a business in variety of ways. Some of its major applications are as under: Inventory valuation: Costing helps in calculation of cost per unit. This cost per unit is employed to value inventory for financial statement and other purposes. Record costs: Costs associated with a product or…
4 pages (1004 words)
Presentation on Cost
Cost accounting information are mainly meant to permit the determination of unit costs and total product costs. Different organizations require different types of cost information. For instance, service organizations need cost information pertaining to the costs incurred for producing and providing services whereas manufacturing firms like Apple Inc, Coca Cola etc need information about costs…
3 pages (753 words)
Managerial Capitalism
In Scale and Scope, Chandler refines and broadens this analytical apparatus. To bring "the modem industrial enterprise into being," a "three-pronged investment in manufacturing, marketing, and management" proved essential, to "consolidate production facilities into plants of optimal size, establish the necessary marketing networks, and recruit the managerial organization." Without it,' 'economies…
6 pages (1506 words)
Chinese Managerial Ethics
Both of these schools of thought taught that the interests of the individual should be of less priority than the interests of the community.…
6 pages (1506 words)
Managerial Accounting Problem
Depreciation only influences net income through taxes, but because I compute before-tax NPV, this doesn't matter. The net cash flow from each year is identical, so the present value of all cash flows can be calculated as PV of annuity with annual payment of 500,000 for 20 years.…
2 pages (502 words)
Managerial Finance
Managerial Accounting: Managerial accounting helps the management in taking futuristic decisions, planning and evaluating the existing strategies of the company. These tasks become much easier when managerial accounting provides the information like;…
6 pages (1506 words)