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o In summary this analysis shows the percent of every dollar in sales that is

Inventories are stated at the lower of cost or market. The method of determining cost for each subsidiary varies among LIFO, FIFO, and average cost.

A rapid build-up of inventories normally requires additional financing, unless the increase is matched by an equally large decrease in some other asset.

* Results in low inventory and in turn low cost of inventory management freeing idle capital.

A total of 80 % of the revenue and prosperity is generated by 20% of the inventory items. This 80-20 connection holds good too in the majority of the inventory cases where it is found that about 80% of the total value is because of the 20% of the items available. Since this '20% of items, 80% of value' principle holds true in many inventory cases, the items of high value require more severe control, and are termed as 'A' class items, and the left behind items are termed as 'B' and 'C' class items in accordance with their decreasing order of value. ‘A’ class items are reviewed regularly, and due to their elevated value they are ordered in little quantities so as to keep the inventory speculation least. ‘B’ class items would be rehabilitated

percentage of total cost is labour cost and processes are highly variant (Kostakis et al.,

Non-stocked products have additional costs associated with processing orders that went above and beyond the costs associated with a stocked product. The third step involved determining what the S&A allocation factor would be for calculating the S&A volume related costs. This allocation factor would then be applied to manufacturing COGS. The fourth and final step involved the calculation of the operating profit based on backing out volume related costs from sales revenues followed by deducting S&A and manufacturing order costs from the resulting gross margin to arrive at a operating profit.

Inventories has financial significance because the goods awaiting for sale can add or take away from the firm’s equity.

The same cost formula is applied to all inventories having a similar nature and use to the entity

ASC 330-10-35-1 provides the guidance for subsequent measurement of inventories. When the utility of inventories is no longer as great as the cost in the initial measurement, subsequent adjustment is required. When the evidence shows that the inventory declines in value below its original cost, the inventory is revalued at either original cost or the market value, whichever is lower. The term market, as defined in ASC 330-10-20, states that it generally means current replacement cost, and that this replacement cost should not exceed net realizable value or be lower than net realizable

It is also well suited for the type of industries where there isn't much processing to do, so the inventory exists at only one level (for sale) rather than at three levels (raw materials, work in progress and for sale)” (Kulkarni, 2010).

• A reduction in obsolescence of items as the result of reduced inventory and a greater inventory turnover

The second term defined is inventory, which is the amount of money the manufacturing plant has spent on things they anticipate to sell. Traditionally inventory is defined as a list of materials or parts in stock on hand for use. The Goal’s definition is more accurate because it takes into account other costs of the inventory not just the material itself. There are raw materials, work in process inventory, and finished goods inventory. In the Goal they accounted for the holding costs to store finished products not yet sold as inventory.

The more inventory a company has… the less likely they will have what they need.

Removal of unnecessary activities, such as receiving, incoming inspection, and paperwork related to bidding, invoicing and payment. And then removal of in plant inventory by delivery in small lots d irectly to the using department as