Q:

How do you calculate ending inventory?

A:

The two methods for calculating ending inventory include the gross profit method and the retail inventory method. The ending inventory is the number of units of inventory that the company on hand at the end of an accounting period. This figure is need for various accounting calculations, including cost of goods sold.

Using the gross profit method, add together the cost of the beginning inventory and the total cost of additional items that were purchased during the period to get the cost of goods available. Subtract the estimated cost of goods sold by the cost of goods available.

With the retail inventory method use the proportion of the retail price to costs in prior periods for a more exact amount.


Is this answer helpful?

Similar Questions

  • Q:

    What is the purpose of inventory control?

    A:

    The primary purpose of inventory control is the efficient movement of materials and goods in line with a company's strategic plans. In particular, a company manages inventory to balance goals of meeting customer demand and minimizing costs, according to Anderson, Anderson and Parker in an excerpt from "Operations Management For Dummies.

    Full Answer >
    Filed Under:
  • Q:

    What are inventory management objectives?

    A:

    According to Careerride.com, the objective of inventory management is to maintain inventory at an approved level to avoid excess or shortage of inventory. Inventory management systems reduce the cost of carrying inventory and ensure the supply of raw material and finished goods remains continuous.

    Full Answer >
    Filed Under:
  • Q:

    How do I calculate MTBF?

    A:

    MTBF usually stands for "mean time between failures" and is defined as the average time between failures of a given system, according to EventHelix.com. This is calculated by taking the sum of all downtime and dividing by the number of system failures.

    Full Answer >
    Filed Under:
  • Q:

    Why do we need inventory?

    A:

    According to ManagementStudyGuide.com, an educational portal, inventory is needed to keep a company independent of outside changes in supply and demand. Maintaining inventory also allows a company to take advantage of outside pricing opportunities.

    Full Answer >
    Filed Under:

Explore