Discussion Questions

  1. For each of the four most common methods of assigning costs to individual items in inventory, give an example of a physical flow of goods that would represent each cost assumption.
    1. Specific Identification
    2. Weighted Average
    3. FIFO
    4. LIFO
  2. What inventory cost assumption does Ford Motor Company use? (You’ll have to find the annual report and read the footnotes to the financial statements.)
    1. Why do you think that is?
    2. Does it make sense?
    3. What other inventory issues does Ford disclose?
    4. Do you think the cost assumption matches the physical flow of goods?
  3. What inventory cost assumption does General Mills use? (You’ll have to find the annual report and read the footnotes to the financial statements,)
    1. Why do you think that is?
    2. Does it make sense?
    3. What other inventory issues does General Mills disclose?
    4. Do you think the cost assumption matches the physical flow of goods?