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Manufacturing inventory, or production inventory, is all of the supplies and materials on hand meant for the manufacturing of products. Retailers and wholesalers have inventories that include only items ready to sell, or merchandise inventory.What are the accounting concepts in manufacturing?
The accounting for a manufacturing business deals with inventory valuation and the cost of goods sold. These concepts are uncommon in other types of entities, or are handled at a more simplified level. The concepts are expanded upon as follows: Inventory valuation.What is the basic underlying model of inventory management?
The basic underlying model of inventory management remains the same. Let us take the example of DELL, which has manufacturing facilities all over the world. They follow a concept of Build to Order where in the manufacturing or assembly of laptop is done only when the customer places a firm order on the web and confirms payment.What are the concepts of inventory valuation?
The concepts are expanded upon as follows: Inventory valuation. A manufacturing business must use a certain amount of raw materials, work-in-process, and finished goods as part of its production processes, and any ending balances must be properly valued for recognition on the company balance sheet. This valuation requires the following activities: