14 Inventory Costs
One thing that it’s important for a business to keep track of is how much is being spent on inventory and how much inventory is being used during a given period of time. One way to keep track of this is by calculating the cost of goods sold. The way to calculate this is to take the value of the inventory you have at the beginning of the time period, add the inventory you buy during that time period, and subtract the value of the inventory you have at the end of the time period.
So let’s say you being the month with an inventory that had cost you $3,128.42. During the month you spend an additional $5,124.30 on inventory. At the end of the month, the inventory you have left had cost you $2,472.13.
You begin by adding the inventory you started with to the inventory you bought during the month: $3,128.42 + $5,124.30 = $8,252.72
Now you subtract the value of the inventory that you have left at the end of the month: $8,252.72 – $2,472.13 = $5,780.59
The cost of goods sold during the month was $5,780.59
If you have a lot of inventory on hand at the beginning of the month and do not spend much on buying more, it might seem as if your costs for what you are selling are lower than they actually are, so this calculation is important to make as you keep track of inventory costs.
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Assignment
Purpose
To practice calculating the inventory costs of a business.
Outcomes
By completing this assignment, you will be able to…
- Understand what inventory costs are.
- Calculate the inventory costs of given businesses.
Instructions
To complete this assignment…
- Read the problems carefully and find the correct answers.
- Be sure to show how you set up each problem.
Tips for Success
To help in the completion of this assignment, make sure to:
- Read each problem carefully and understand what it is asking.
- Include how you set up each problem in order to get credit.
Inventory Costs Assignment
Fill in the costs in the table below:
| Inventory at Beginning of Month | Amount Spent on Inventory During Month | Total Inventory Cost for Month | Inventory Left at End of Month | Cost of Goods Sold |
| $1,485.90 | $2,857.42 | 1) | $2,046.21 | 2) |
| $254.78 | $3,285.78 | 3) | $1,003.57 | 4) |
| $985.80 | $3,897.06 | 5) | $894.68 | 6) |
| $3,482.27 | $438.59 | 7) | $2,685.63 | 8) |
| $2,583.48 | $1,463.79 | 9) | $2,345.17 | 10) |
| $563.79 | $974.08 | 11) | $194.69 | 12) |
| $756.28 | $1,980.59 | 13) | $699.79 | 14) |
| $2,356.58 | $1,254.57 | 15) | $1,138.99 | 16) |
| $1,897.37 | $1,372.43 | 17) | $799.14 | 18) |
| $386.48 | $1,283.38 | 19) | $498.59 | 20) |
| $896.29 | $928.28 | 21) | $210.29 | 22) |
| $1,203.99 | $1,485.48 | 23) | $959.24 | 24) |
| $3,291.23 | $23.68 | 25) | $2,102.39 | 26) |
| $2,192.34 | $1,293.21 | 27) | $1,876.42 | 28) |