A Comparison of Alternative Inventory-Costing Methods Homework Help

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Importance of inventory and costing methods

When it comes to accounting often the aspect of inventory and calculation of stocks in the inventory are ignored. This is a vital mistake which many companies make, and it ultimately makes these organizations lose out on the rise in their total annual income.

If the smallest alteration is made, then there is a direct effect on the inventory. The inventory consists of not only completed products but also raw materials. The demand, supply, and distribution of the items help understand inventory.

With the help of a comparison of alternative inventory-costing methods assignment help the different costing methods as well as the process of calculating the stock takes place. The student has to know these methods in order to ensure maximum absorption of information.

Comparison of inventory costing methods

Inventory costing methods are those techniques adopted by agencies which ensure optimum rate of profits and anoverall increase in income. There are different methods from which a company can choose. Usually, one method is applied for a whole year to notice the benefits or for noting the limitations. In a comparison of alternative inventory-costing methods assignment help the following techniques are dealt with:

  1. Weighted average

This method depends solely on the evaluation of the average unit cost. The average cost can be calculated by dividing the price of all the goods available for sale with the amount of the total number of units which can be sold.

  1. First in, first out

In this technique, the oldest cost or the first in cost is placed against the revenue and associated to the price of the items which are to be put up for sale. Also in this method, the recent or the first out costs are associated with the total units involved in ending the inventory.

  1. Last in, first out

This is just the opposite method of the first in, first out technique. Here the latest investments are assigned to items which are sold while old costs remain in inventory.

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