Inventory Cost Accounting: Methods & Examples
ContentProduct Cost Versus Period Cost:Main Inventory Costing MethodsAdditional Accounting FlashcardsPeriod CostsUnderstanding inventoriable costs Managerial accounting is the practice of analyzing and communicating financial data to managers, who use the information to make business decisions. A direct cost is a price that can be completely attributed to the production of specific goods for inventoriable costs to become expenses under the matching principle, or services. The Pacific Bead Company sells handcrafted beads from local island crafters to retail markets and customers out of its warehouse. From the company’s accounting software, the following is its reporting period information. On the other hand, a business will incur period costs whether it manufactures a product or not. Though for manufacturing businesses, inventory may also represent the cost of raw materials and work-in-progress. While just knowing the inventoriable costs of your business is already beneficial, you’d also want to know it on a per-unit basis. Other costs necessary to transport the materials to the factory or production floor (e.g. freight-in, inspection costs, etc.). Cost that is considered to be part of the cost of merchandise. For a retailer, the inventoriable cost is the cost from the supplier plus all costs necessary to get the item into inventory and...