What is Issued Inventory Valuation Inventory Issue Valuation Method

The cost of inventory issued must be calculated in order to be accounted for, and the valuation method of inventory cost is mainly to determine the actual cost of inventory issued and the value of inventory at the end of the period. Since the actual cost of each purchase of inventory may be different, the time cost of issuing inventory must be determined according to a certain method when the inventory is issued.

The main pricing methods are:1

FIFO, 2

Weighted average method.

Individual Valuation Method.

1. First-in-first-out method.

The cost of materials issued in the current month = 1000 * 10 + 1000 * 12 + 2000 * 12 = 46000

Closing balance = 1000 * 9 + 2000 * 10 = 29000

2. One-time weighted average method.

Average unit price = (1000*10+3000*12+1000*9+2000*10) (1000+3000+1000+2000)=

The cost of materials issued in the current month = 4000*

Closing balance = (1000 * 10 + 3000 * 12 + 1000 * 9 + 2000 * 10) - 42840 = 32160

3. Moving weighted average method.

5 days issued inventory unit price = (1000 * 10 + 3000 * 12) (1000 + 3000) = 46000 4000 =

5-day inventory cost = 2000 * 11 = 22000

5-day inventory balance = 46000-22000 = 24000, inventory quantity = 4000-2000 = 2000

30 days issued inventory unit price = (24000 + 1000 * 9 + 2000 * 10) (2000 + 1000 + 2000) = 53000 5000 =

30-day inventory cost = 2000*

30-day inventory balance = 53000-21200 = 31800

The cost of inventory issued this month = 22000 + 21200 = 43200

4. Individual valuation method.

5-day inventory cost = 500 * 10 + 1500 * 12 = 23000

30 days out of inventory cost = 1000 * 9 + 1000 * 10 = 19000

The cost of inventory issued this month = 23000 + 19000 = 42000

30-day inventory balance = 1000 * 10 + 3000 * 12 + 1000 * 9 + 2000 * 10-42000 = 33000

1. First-in-first-out method.

The cost of materials issued in the current month = 1000 * 10 + 1000 * 12 + 2000 * 12 = 46000

Closing balance = 1000 * 9 + 2000 * 10 = 29000

2. One-time weighted average method.

Average unit price = (1000*10+3000*12+1000*9+2000*10) (1000+3000+1000+2000)=

The cost of materials issued in the current month = 4000*

Closing balance = (1000 * 10 + 3000 * 12 + 1000 * 9 + 2000 * 10) - 42840 = 32160

3. Moving weighted average method.

5 days issued inventory unit price = (1000 * 10 + 3000 * 12) (1000 + 3000) = 46000 4000 =

5-day inventory cost = 2000 * 11 = 22000

5-day inventory balance = 46000-22000 = 24000, inventory quantity = 4000-2000 = 2000

30 days issued inventory unit price = (24000 + 1000 * 9 + 2000 * 10) (2000 + 1000 + 2000) = 53000 5000 =

30-day inventory cost = 2000*

30-day inventory balance = 53000-21200 = 31800

The cost of inventory issued this month = 22000 + 21200 = 43200

4. Individual valuation method.

5-day inventory cost = 500 * 10 + 1500 * 12 = 23000

30 days out of inventory cost = 1000 * 9 + 1000 * 10 = 19000

The cost of inventory issued this month = 23000 + 19000 = 42000

30-day inventory balance = 1000 * 10 + 3000 * 12 + 1000 * 9 + 2000 * 10-42000 = 33000

According to China's "Accounting Standards for Business Enterprises", "when various inventories are issued, enterprises can choose Duan Chi Oak to use the first-in-first-out method, weighted average method, moving weighted average method, individual valuation method and other methods to determine its actual cost according to the actual situation." "Most enterprises, inventory issued according to the first-in-first-out method or weighted average method to calculate the cost of the warehouse, a small number of customized valuable equipment enterprises, spare parts are specially customized, using the individual grip pricing method to calculate the amount of issuance.

1 Individual valuation method (individual identification method, specific identification method, batch actual method):

Assuming that the physical circulation of specific items of inventory is consistent with the cost circulation, the method of deducting the cost of wholesale inventory and ending inventory is calculated according to the unit cost determined at the time of purchase or production according to the purchase batch or production batch to which each inventory belongs one by one.

The cost calculation of the individual valuation method is accurate and in line with the actual situation, but in the case of frequent inventory receipt and delivery, the workload of issuing cost discrimination is large. Therefore, this method is suitable for inventory that cannot be used in general, inventory purchased or manufactured specifically for a particular item, and services provided, such as jewelry, famous paintings, and other valuables.

2 FIFO Method:

A method of valuing issued inventories on the assumption that the physical flow of inventories purchased first should be issued first.

This method allows you to carry forward inventory issue costs at any time, but it is more cumbersome. If there are many inventory issuance and collection operations and the unit price of inventory is unstable, the workload is large.

When prices continue to rise, the cost of inventory at the end of the period is close to the market price, while the cost of issuance is low, which will overestimate the current profit and inventory value of the enterprise. On the contrary, it will underestimate the value of the company's inventory and current profits.

Month-end weighted one-time averaging method:

It is a method of calculating the cost of inventory issued and the cost of inventory at the end of the period by dividing the total purchase cost of the month plus the inventory cost at the beginning of the month by dividing the total purchase cost of the month plus the inventory cost at the beginning of the month.

Cost of Inventory Units = (Inventory Cost at the Beginning of the Month + Inventory Cost of Incoming Inventory at the Beginning of the Month) (Inventory Quantity at the Beginning of the Month + Inventory Quantity Incoming Inventory in the Month), Inventory Cost Issued in the Month = Inventory Unit Cost Issued This Month, Inventory Inventory Cost at the End of the Month = Inventory Unit Cost Inventory Quantity in Inventory at the End of the Month, 4 Moving Weighted Average:

The total amount of the cost of inventory per purchase plus the cost of inventory of the original inventory, divided by the total amount of the quantity of each purchase plus the quantity of the original inventory, is used to calculate the weighted average unit cost of inventory as a method of calculating the cost of inventory issued each time before the next purchase.

Cost of Inventory Units = Cost of Inventory of Original Inventory + Cost of Inventory of this Purchase) (Quantity of Inventory in Inventory + Quantity of Inventory Purchased), Cost of Inventory Issued = Cost of Inventory Units Quantity of Inventory Issued This Time, Cost of Inventory at the End of the Month = Cost of Inventory Units Quantity of Inventory at the End of the Month.

The valuation methods of issued inventory include first-in-first-out method, moving weighted average method, month-end weighted average method, and individual valuation method.

The first-in-first-out method is a method of valuing the issued inventory on the assumption that the inventory purchased first should be shipped (sold or consumed) first.

The individual valuation method is a method of assuming that the physical circulation of specific items of inventory is consistent with the circulation of costs, and identifying the purchase batch or production batch to which each wholesale inventory and the ending inventory belong according to each inventory, and calculating the cost of each wholesale inventory and the ending inventory according to the unit cost determined at the time of purchase or production.

The weighted average method at the end of the month refers to a method that calculates the weighted average unit cost of inventory by removing all the purchase costs of the month plus the inventory cost at the beginning of the month by removing all the purchase costs of the month plus the inventory costs at the beginning of the month, and calculating the cost of inventory at the end of the period on this basis.

The moving weighted average method is a method of calculating the weighted average unit cost by adding the cost of each purchase plus the cost of the original inventory inventory and dividing the quantity of each purchase plus the quantity of the original inventory inventory as the basis for calculating the cost of each issued inventory before the next purchase.

The valuation methods for inventory issuance are: first-in-first-out method, moving weighted average method, month-end weighted average method, and individual valuation method.

1. First-in-first-out method.

The FIFO method is a method that assumes that "first-in-stock inventory is issued first" and determines the cost of inventory issued according to this hypothetical cost flow order.

2. Moving weighted average method.

The moving weighted average method is a calculation method in which a new average unit cost is calculated immediately after each receipt based on the inventory quantity and total cost.

Moving average unit cost of inventory = (actual cost of inventory before this purchase + actual cost of this purchase) (quantity of inventory before this purchase + quantity of this purchase).

Cost of Inventory Issued = Quantity of Inventory Issued This Time Moving Average Unit Cost.

Cost of Inventory at the End of the Month = Quantity of Inventory at the End of the Month Moving average unit cost of the inventory at the end of the month.

3. Month-end weighted average method.

Weighted average unit cost of inventory = [Actual cost of inventory at the beginning of the month + (Actual unit cost of each batch of purchases this month Quantity of each batch purchased this month)] Inventory quantity at the beginning of the month + Quantity of each batch purchased this month).

The cost of inventory issued this month = the quantity of inventory issued this month plus the average unit cost of bank portability.

The cost of inventory at the end of the month = the quantity of inventory at the end of the month Weighted average unit cost.

4. Individual valuation method.

Individual valuation method: also known as individual identification method, specific identification method, batch actual method, which is characterized by focusing on the connection between the physical circulation and cost circulation of specific items of the issued inventory, identifying the purchase batch or production batch to which the wholesale inventory and the ending inventory belong one by one, and calculating the cost of each wholesale inventory and ending inventory according to the unit cost determined at the time of purchase or production.

What is inventory

Inventory refers to the finished products or commodities held by the enterprise in its daily activities, the products in the production process, the materials or materials used in the production process or the provision of labor services, etc., including finished products, inventory commodities, packaging materials, etc. Inventory is a tangible asset with strong liquidity, rapid liquidity, timeliness and the possibility of potential loss.