Three key variables determine the dollar value of inventory: (1) inventory quantity, (2) costs of inventory, and (3) cost flow assumption.

Question

Quizplus · Accepted Answer

These three variables are indeed key factors that determine the dollar value of inventory. Inventory quantity refers to the amount of goods on hand, while costs of inventory include the direct and indirect costs associated with obtaining, storing, and handling inventory. Cost flow assumption refers to the method used to allocate costs to inventory units sold and those still on hand. All three of these factors affect the overall value of inventory in dollars.

Three Key Variables Determine the Dollar Value of Inventory: (1)