Inventory Valuation Methods and Calculations

The video tutorial covers various methods for calculating inventory value, including weighted average, FIFO, LIFO, gross profit, retail, and lower cost methods. Each method is explained with examples, focusing on how to determine the value of remaining inventory using different approaches. The tutorial also highlights the importance of understanding these methods for accurate inventory management.

What is the first step in solving the inventory value using the weighted average method?

• Determine the selling price.

• Identify the oldest inventory.

• Calculate the total cost.

• Find the total number of units.

How do you calculate the average cost in the weighted average method?

• Multiply total cost by total units.

• Divide total cost by total sales.

• Subtract total cost from total sales.

• Divide total cost by number of units.

In the FIFO method, which inventory is sold first?

• Newest inventory

• Oldest inventory

• Most expensive inventory

• Cheapest inventory

When using the FIFO method, from which inventory are the remaining backpacks taken?

• Middle inventory

• Newest inventory

• Oldest inventory

• Random inventory

In the LIFO method, which inventory is sold first?

• Most expensive inventory

• Cheapest inventory

• Oldest inventory

• Newest inventory

How is the remaining inventory calculated in the LIFO method?

• From the oldest inventory

• From the cheapest inventory

• From the newest inventory

• From the middle inventory

What is the formula for cost of goods sold in the gross profit method?

• Cost of goods sold = Markup - Net sales

• Cost of goods sold = Net sales + Markup

• Cost of goods sold = Net sales - Markup

• Cost of goods sold = Markup + Net sales

In the gross profit method, what is the markup rate used for?

• To calculate total sales

• To determine cost of goods sold

• To estimate ending inventory

• To find beginning inventory

In the retail method, what is subtracted from merchandise available for sale?

• Cost of goods sold

• Net sales

• Beginning inventory

• Total purchases

Why is it important to use retail prices in the retail method?

• To simplify calculations

• To ensure accurate inventory valuation

• To align with market trends

• To match cost prices