Inventory Systems Qrb

acquit-taking Systems QRB 501 Quantitative Reasoning for Business Inventory Systems Hormel Foods The inventory placement that I decided to discuss is called First-In, First-Out (FIFO). FIFO method assumes that the original unit making its way into inventory is the outset sold. Inventory is defined as assets that ar intended for sale, are in process of being produced for sale or are to be used in producing goods (Investopedia, 2010). According to Jean Murray, the inventory at the end of a year consists of the goods most novelly move in inventory. FIFO is one method used to bound Cost of Goods Sold for a business (Murray, 2010). Here are some vantages and disadvantages of the FIFO Method. Advantages of FIFO Method: Main advantage of FIFO method is that it is simple to at a lower placestand and easy to put away (Assar, 2010). It is a logical method because it takes into consideration the normal outgrowth of utilizing first those materials, which are received first. Materials are issued in rove of purchases, so materials received first are utilized first (Assar, 2010). Under this method, materials are issued at the purchase set; so the cost of jobs or work orders is correctly ascertained so far as cost of materials is concerned. Thus, the method recovers the cost price of the materials (Assar, 2010).

This method is useful when prices are falling (Assar, 2010). Closing stock of materials will be valued at the market price, as the closing stock under this method would consist of recent purchase of materials (Assar, 2010). This method is also useful when transactions are not too many another(prenominal) and prices of materials are fairly even (Assar, 2010). Disadvantages of FIFO Method: FIFO method is improper if many lots are purchased during the period at different prices (Poudel, 2010). The objective lens of matching current costs with current revenues cannot be achieved under FIFO method (Poudel, 2010). If the prices... If you want to get a honorable essay, order it on our website: Orderessay

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