[Roxwella]

Hello you wonderful people,

Ive been working FAR sims and I came across two separate sims that are done in this same fashion. The first time through I though this was an error. Now, I think I may be the issue. The link below will take you to a pic of an inventory table, problem is done with Fifo (which I understand completely), so the left side where you calculate the numbers is not my problem. Its the stuff on the right side under “Inventory”. I just don’t understand how this running total works..or maybe they have just made two very similar mistakes. If this is correct, how is it calcd? Any input would be greatly appreciated!

https://tinypic.com/r/29ljk1z/6

[Minimorty]

The running total breaks down the inventory purchased into lots. So you start with 400 purchased. Your next 400 sales are going to come out of that lot under FIFO. But if you purchase more inventory before you sell the 400 you have, you need to keep a running total of that new lot as well (you likely purchased it at a different price and you need to keep track for your COGS calculation). So at each date, the calculation provides a running total of your inventory on hand, broken down by lot.

[Roxwella]

Duh! So they are literally separating each lot, rather than some grand running total. I was trying to figure out why there were all those extra lines after the transactions, it is to keep each individual lot straight. Thanks!

[Author]

Replies