List and Briefly Describe the Five Steps in Estimating a Cost

question 147

Essay

List and briefly describe the five steps in estimating a cost function using quantitative analysis.

---

Definitions:

Inventory Turnover Ratio

A measure of how quickly a company sells and replaces its stock of goods within a given period.

Cost of Goods Sold

The total cost of materials and labor directly involved in producing goods or services sold during a period.

Beginning Merchandise Inventory

The value of goods on hand at the start of an accounting period for the purpose of sale in the course of business.

Ending Merchandise Inventory

The final value of a company's inventory at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.