For a Merchandising Company,what Is the Formula Used to Determine

question 127

Essay

For a merchandising company,what is the formula used to determine the amount of merchandise inventory to be purchased?

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Definitions:

Cost of Goods Sold

Direct expenditures associated with producing the items a company offers for sale.

Weighted Average

A calculation that takes into account the differing degrees of importance of the numbers in a data set.

FIFO and LIFO

Inventory valuation methods; FIFO (First In, First Out) assumes that the earliest goods purchased are the first to be sold, while LIFO (Last In, First Out) assumes the reverse.

LIFO Inventory

A method of inventory valuation where the last items added to inventory are the first ones assumed to be sold, typically used to decrease tax liabilities under inflationary conditions.