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Inventory valuation and methods

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  What Is Inventory Valuation? Inventory valuation is a process in accounting that businesses use to determine the value of unsold inventory stock when they are producing their financial accounts. For an organization, inventory stock is an asset that must have a monetary value in order to be recorded on the balance sheet. Your inventory turnover ratio can be calculated using this value, which can help you plan your purchasing decisions. As an illustration, suppose you own a shoe store and at the end of the year you still have 50 pairs of shoes. You must determine their financial worth and record it on your balance sheet. Let's examine the method and rationale behind your value calculation. Costs Included in Inventory Valuation Inventory is present at the end of an accounting period in both a finished and unfinished state. What do you think that investment is worth? You need pieces to assemble a bicycle. However, you also need someone to assemble the pieces, and you have a number of...
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Decision analysis

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Differential Analysis Decisions Differential analysis decisions, referred to as alternative choices decisions, cover situations with two or more alternative courses of action from which the manager (decision maker) must select the best alternative. A decision involving more than two alternative is called a multiple-alternative choice decision. Some examples of alternative choice decisions are: make or buy, own or lease, retain or replace, repair or renovate, now or later, change versus status quo, slower or faster, export versus local sales, shut down or continue, expand or contract, change the product-mix, take or refuse orders, place special orders, select sale territories, replace present equipment with new machinery, sell at split-up point or process further, etc. 1. Make or Buy/Insourcing Vs Outsourcing Decisions: Make or  buy decisions, also referred to as in-sourcing vs outsourcing decisions, arise when a company with unused production capacity considers the follow...
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