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Inventory Formula
The equation used to calculate the value of a company's inventory, commonly stated as Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory.
Physical Flow
The actual movement of goods or materials through a manufacturing process, from receipt of raw materials to delivery of finished products.
Weighted Average Method
An inventory valuation method that applies a weighted average cost to the goods available for sale, to calculate cost of goods sold and ending inventory.
Responsibility Centre
A management accounting tool in which parts of an organization are allocated responsibility for controlling costs, revenues, or investments.
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