Describe Scenario Planning

question 49

Essay

Describe scenario planning.

Estimate the cost of goods sold or ending inventory using financial ratios or given financial data.

Evaluate the impact of inventory methods on financial statements and the calculation of gross profit.

Determine the appropriate inventory valuation under various circumstances using the lower of cost or market rule, including consideration of market replacement costs and net realizable value.

Understand how to calculate ending inventory and cost of goods sold using FIFO and LIFO methods under a perpetual inventory system.

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Definitions:

Capacity

The maximum level of output that a company can sustain to make a product or provide a service under normal conditions.