Under what circumstances would a company need to estimate its inventory? What are the differences between using the gross profit method and the retail inventory method for estimating inventory? Which method of estimation, gross profit or retail inventory, is best? Explain your answer.
Under what circumstances would a company need to estimate its inventory? What are the differences between using the gross profit method and the retail inventory method for estimating inventory? Which method of estimation, gross profit or retail inventory, is best? Explain your answer.
The worth of the items in your inventory at the time of your most recent physical count is the starting point for the gross profit method calculation. Keep in mind that inventory's "worth" actually refers to your cost, not its selling price.
The retail inventory method's computation is quite similar to the gross profit method's. Start by adding the cost of things purchased since the last hand count to the inventory cost from that time.
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