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).