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Evaluation of entries in stock
The entry cost of a stock as an asset (estimated to take stock) consists of:
acquisition costs that are the purchase prices of raw materials, supplies or goods, plus any shipping and handling, customs duties and other taxes not recoverable;
processing costs that are costs added to purchase price in order to achieve the cost of production determined by the cost accounting;
costs occured in bringing the inventories to their present location and condition they are.
The costs necessarily excluded from the cost of inventories are:
marketing costs such as advertising and cost of sales staff;
costs which do not bring the inventories to their present location and condition they are;
abnormal consumption (raw materials, maintenance ... exceptional);
unnecessary storage costs in the production process.
For the real cost of stock (to be recorded) 3 main types of methods are allowed. (According to IAS / IFRS)
The (3 or 4) methods of the actual costs (by withholding actual production costs or acquisition costs).
Periodic weighted average cost (WAC): The unit cost of output of stock items is equal to the sum (of the initial value of + those entries in stock) divided by the sum of (amount of initial and those entries in stock). If these are stocks of finished products, the unit cost of entry will be the cost of production (see for determination of cost accounting).
First in first out (FIFO, LIFO French): The unit cost of output of a type of inventory item is equal to the value of the article which came first chronologically in the stock. An article from $ 10 to $ 20 then it will come out first at 10 $.
Last in, first out (LIFO): The unit cost of output of a type of inventory item is equal to the value of the item that is entered last chronologically in stock. An article from $ 10 to $ 20 then it will come out first at 20 $.
First expired first out (First expired first out (FEFO)): this type of management is tolerated particularly suitable for products with a DLC (Deadline consumption) or a DLU (Deadline for Use). Consideration of the deadline for entry into the system do the outputs.
The standard cost method which calculates the value from the normal levels of raw materials, labor, efficiency and capacity.
The method of the retail price (or retail method)
For each group of homogeneous products, we determine an average percentage of gross margin. The stock value, by category of homogeneous products, is obtained by deducting sales and gross margin calculated.