- This topic has 1 reply, 2 voices, and was last updated 6 months ago by
John Moffat.
John Moffat.-
Posts
-
Syed Ahsan Ali
- Topics: 107
- Replies: 66
- ☆☆
Closing inventory is the inventory that remains unsold at the year-end so it should be deducted from the total production costs (i.e. cost of goods sold) to get the actual COGS during the year.
Closing inventory in absorption and marginal costings:
1) Absorption costing = (Sales units – Production units) x Total Production costs
(Total Production costs include both variable and fixed costs)
2) Marginal costing = (Sales units – Production units) x Total Production costs
(Total Production costs include variable cost only)
John Moffat
- Topics: 57
- Replies: 49600
- ☆☆☆☆☆
You have not asked a question, but I assume you want me to check whether what you have written is correct or not!!
The closing inventory units is equal to the opening inventory units + production units – sales units.
The way that the inventory is valued is the way that you have written.
John Moffat- You must be logged in to reply to this topic.