FAR 7032 – INVENTORY

1. Trading concern – Merchandise Inventory

2. Manufacturing concern
a. Finished Goods Inventory
b. Work-in-process Inventory
c. Raw Materials Inventory
d. Manufacturing Supplies

Legal Title Test: Owner of Inventory

a. FOB Shipping Point - Upon shipment
b. FOB Destination – Upon receipt

Measurement of Inventory
1. Cost of purchase
2. Cost of conversion
a. Direct Labor
b. Overhead costs
3. Other costs to bring inventory to present
location & condition excluding:
a. Abnormal loss
b. Admin overhead
c. Selling costs
d. Storage costs after inventory is already
at intended condition