Comparing 'Cost Of Goods Sold And Inventory'
Memorandum
To: President, Fenimore Manufacturing Company
From: Name, Accounting Advisor
Date: 11/10/14
Re: Average Cost Method vs. Cost of Goods Sold and Inventory
After researching the issue of which method of accounting for manufacturing cost variances is consistent with GAAP, my findings, ASC 330-10-30-12, Standard costs are acceptable if adjusted at reasonable intervals to reflect current conditions so that at the balance-sheet date standard costs reasonably approximate costs computed under one of the recognized bases. In such cases descriptive language shall be used which will express this relationship, as, for instance, "approximate costs determined on the first-in first-out basis," or, if it is desired to mention standard costs, "at
To: President, Fenimore Manufacturing Company
From: Name, Accounting Advisor
Date: 11/10/14
Re: Average Cost Method vs. Cost of Goods Sold and Inventory
After researching the issue of which method of accounting for manufacturing cost variances is consistent with GAAP, my findings, ASC 330-10-30-12, Standard costs are acceptable if adjusted at reasonable intervals to reflect current conditions so that at the balance-sheet date standard costs reasonably approximate costs computed under one of the recognized bases. In such cases descriptive language shall be used which will express this relationship, as, for instance, "approximate costs determined on the first-in first-out basis," or, if it is desired to mention standard costs, "at