perishable goods

Examples of perishable goods in the following topics:

• Seasonal Production

  • Seasonal trends and internal projections of consumption in certain goods can have a significant impact on opportunity cost and potential profit for an organization.
  • An important aspect of seasonal inventory management is the concept of perishable goods.
  • This is called a perishable good.
  • Perishable goods have an even greater opportunity cost when it comes to mismanaging (and erroneously predicting) demand.
  • If too much of a perishable good is ordered, not only will it cost the organization in unnecessary inventory fees, but also adds the risk of never been sold at all (a complete sunk cost at that point).

• Discrepancies

  • This can be due to petty theft, mismanaged inventory, perishable goods going unrecorded, and a wide variety of other factors.
  • Waiting to be audited is not a good tactic, as this will likely result in fees or penalties for inaccurate reporting.

• Barter and Functions of Money

  • Without money, the buyers would exchange goods with the sellers by exchanging one good for another good, which we call barter.
  • Problem 2: Many goods, like fruits and vegetables, deteriorate and rot over time.
  • Growers of perishable goods could not store their purchasing power.
  • They would need to exchange their products for goods that would not perish quickly if they want to save.
  • A price ratio shows the amount of one good that buyers and sellers exchange for another good, and we show examples of price ratios in Figure 2.

• Answers to Chapter 1 Questions

  • Thus, some assets are good as money.
  • Inflation is continual increases in the average prices; GDP measures the total amount of production of all goods and services within the economy.
  • Barter is inefficient because it does not allow people to specialize in the production of goods and services.
  • People would have considerable search costs to find each other, and people could not store perishable products.
  • Each function of money overcomes a problem with barter and allows people to specialize in the production of goods and services.

• Inventory Types

  • Most manufacturing organizations usually divide their inventory into raw materials, work in process, finished goods, and goods for sales.
  • Most manufacturing organizations usually divide their inventory into raw materials, work in process, finished goods, and goods for sales.
  • A good only partially completed during the manufacturing process is called "work in process. " When the good is completed as to manufacturing but not yet sold or distributed to the end-user, it is called a "finished good. "
  • Finished goods: Goods ready for sale to customers.
  • Finished goods is a relative term.

• Inventory Techniques

  • It takes Cost of Goods Available for Sale and divides it by the total amount of goods from Beginning Inventory and Purchases.
  • A physical count is then performed on the ending inventory to determine the amount of goods left.
  • After each purchase, Cost of Current Inventory is divided by Current Goods Available for Sale to get Current Cost per Unit on Goods.
  • The Current Goods Available for Sale is deducted by the amount of goods sold, and the Cost of Current Inventory is deducted by the amount of goods sold times the latest (before this sale) Current Cost per Unit on Goods.
  • This deducted amount is added to Cost of Goods Sold.

• Inputs to the Production Schedule

  • Production schedule can be divided into raw materials, work in process, finished goods and goods for resale.
  • A good purchased as a "raw material" goes into the manufacture of a product.
  • When the good is completed as to manufacturing but not yet sold or distributed to the end user, it is called a "finished good. "
  • Finished goods are goods that have completed the manufacturing process but have not yet been sold or distributed to the end user.
  • Finished goods is a relative term.

• Inputs to COGS

  • Cost of goods sold (COGS) refer to the inventory costs of the goods a business has sold during a particular period.
  • Costs of goods made by the business include material, labor, and allocated overhead.
  • The costs of those goods not yet sold are deferred as costs of inventory until the inventory is sold or written down in value.
  • More or fewer goods may be produced than expected when developing cost assumptions (like burden rates).
  • These differences in production levels often result in too much or too little cost being assigned to the goods produced.

• Inventory Costs

  • It takes Cost of Goods Available for Sale and divides it by the total amount of goods from Beginning Inventory and Purchases.
  • After each purchase, Cost of Current Inventory is divided by Current Goods Available for Sale to get Current Cost per Unit on Goods.
  • The Current Goods Available for Sale is deducted by the amount of goods sold.
  • The Cost of Current Inventory is deducted by the amount of goods sold times the latest (before this sale) Current Cost per Unit on Goods.
  • This deducted amount is added to Cost of Goods Sold.

• Recording Purchases

  • In merchandising accounting, purchases are the amount of goods a company buys in the course of a year, including the kind, quality, quantity, and cost.
  • In accounting, purchases are the amount of goods a company buys over the course of the year.
  • FOB is an abbreviation which pertains to the shipping of goods.
  • The last distinction is important for determining liability for goods lost or damaged in transit from the seller to the buyer.
  • The initials FOB represent ownership and responsibilities involving the shipping and receiving of goods.