Note the operational efficiency for determining 1992's
beginning inventory cost at 1992 year-end prices.
Since the previous period's ending inventory value becomes the next period's
beginning inventory value, we will use the Part table to get the value for the first quarter to create data for
Beginning Inventory.
From
beginning inventory (@ plantwide rates): Hi-V: (10% X 12,000) X $88 $105,600 Lo-V: 0 X $32 _______ $ 105,600 From production (@ ABC rates): Hi-V: (90% X 12,000) X $69.49 750,492 Lo-V: @ 6,000 X $69.01 414,060 1,164,552 Cost of goods sold $1,270,152
Any bargain purchase element reflected in the
beginning inventory will be increased to current cost.
The
beginning inventory was $10,000, sales for the period were $100,000 and purchases were $72,000.
Less
Beginning Inventory: This is the
beginning inventory for a quarter.
The proposed regulations exclude sales-based vendor allowances from the numerator (the cost of
beginning inventory and the cost of purchases) of the cost-to-retail ratio.
In the first year of UNICAP, 54 percent of the C firms took advantage of the "estimation procedures" to revalue
beginning inventory, while only 47 percent of the NC group elected this procedure.
The report then subtracts
Beginning Inventory of parts in order to calculate Direct Materials to be purchased, cost per unit, and cost of purchases.
The ratio is (1) the total cost of goods in
beginning inventory plus purchases of goods during the year to (2) the retail selling prices of the goods in
beginning inventory plus the retail selling prices of inventory purchased during the year, with proper adjustments to the selling prices for markups and markdowns.
The storage and handling cost ratio is the ratio of current year storage and handling costs to the total of
beginning inventory and current year purchases.
The criteria for Budget Type should be: "
Beginning Inventory" Or "Ending Inventory" Or "Sales" (see Figure 1).