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FIFO and LIFO accounting are methods used in managing inventory and financial matters involving the amount of money a company has to have tied up within inventory of produced goods, raw materials, parts, components, or feedstocks. They are used to manage assumptions of costs related to inventory, stock repurchases (if purchased at different ...
In the context of a manufacturing production system, inventory refers to all work that has occurred—raw materials, partially finished products, finished products prior to sale and departure from the manufacturing system. In the context of services, inventory refers to all work done prior to sale, including partially process information.
In throughput accounting, the cost accounting aspect of the theory of constraints (TOC), operating expense is the money spent turning inventory into throughput. [4] In TOC, operating expense is limited to costs that vary strictly with the quantity produced, like raw materials and purchased components.
An important part of standard cost accounting is a variance analysis, which breaks down the variation between actual cost and standard costs into various components (volume variation, material cost variation, labor cost variation, etc.) so managers can understand why costs were different from what was planned and take appropriate action to ...
Costs of materials include direct raw materials, as well as supplies and indirect materials. Where non-incidental amounts of supplies are maintained, the taxpayer must keep inventories of the supplies for income tax purposes, charging them to expense or cost of goods sold as used rather than as purchased.
When a product is in a warehouse or store, it can be tracked via its barcode and/or other tracking criteria, such as serial number, lot number or revision number.Systems. for Business, Encyclopedia of Business, 2nd ed. Nowadays, inventory management software often utilizes barcode, radio-frequency identification (RFID), and/or wireless tracking technology.
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Direct materials cost the cost of direct materials which can be easily identified with the unit of production. For example, the cost of glass is a direct materials cost in light bulb manufacturing. [1] The manufacture of products or goods requires material as the prime element. In general, these materials are divided into two categories.