Why the value of inventory matters
The value put on closing inventory changes the cost of materials used, and so the profit. See how, with one month of figures.
Task 1What inventory is3 questions
Inventory is the goods a business holds at a point in time. A business that makes things holds three kinds.
- Raw materials
- bought but not yet used, such as oak boards in the store
- Work in progress
- started but not finished, such as a table top with no legs
- Finished goods
- made and waiting to be sold, such as tables in the showroom
Task 2The cost of what was used3 questions
Task 3Why the value changes the profit3 questions