ACCT 1100: Chapter 6

Ending inventory =

• number of units SOLD * unit cost

• number of units ON HAND * unit cost

Cost of goods sold =

• number of units SOLD * unit cost

• number of units ON HAND * unit cost

Specific unit cost

• COGS is based on the oldest purchases

• uses the specific cost of each unit of inventory for items that have a distinctive identity

• COGS is based on average cost for the period

First-in, First-out (FIFO)

• COGS is based on the oldest purchases

• uses the specific cost of each unit of inventory for items that have a distinctive identity

• COGS is based on average cost for the period

Weighted-average cost

• COGS is based on the oldest purchases

• uses the specific cost of each unit of inventory for items that have a distinctive identity

• COGS is based on average cost for the period

Specific unit cost: uses the soecific cost of each unit of inventory for iteams that have a _

First-in, First-out (FIFO): COGS is based on the

Weighted-average cost: COGS is based on the _ for the period

A new weighted-average cost per unit is calculated after each _

When purchase cost are INCREASING, _ produces the lower COGS, the higher gross margin, thus, the higher net income