AVERAGE AGE OF INVENTORY Definition

AVERAGE AGE OF INVENTORY is calculated by the formula: 365 / inventory turnover.

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QUALITY is a degree or grade of excellence or worth; can be highly subjective.

VISUAL-FIT METHOD is a cost estimation method where an analyst examines a cost by plotting points on a graph (called a scatter diagram) and places a line through the points to yield a cost function. This method is more objective than the account-classification method, but it is still lacking because two cost analysts could (and likely would) visually fit different lines. Such an approach is useful, though, because it helps spot non-representative data points, or outliers.

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