What it is
An inventory price test recomputes the cost of what is on hand. For FIFO the ending quantity takes the newest layers; for weighted average it takes the average cost of everything available.
The workbook takes a beginning layer and up to three purchase lots per item, recomputes the value under both methods, picks the entity’s method and compares it with the book value with a tolerance flag.
When to use it
- Price testing inventory in an audit.
- Checking a perpetual system’s costing.
- Comparing methods for a change in policy.
What’s inside
- Items tab with layers, lots, counts and both method values
- Summary tab with differences and ledger tie-out
- Flag for counts above quantity available
- Legend tab
Standard cited
This template follows AU-C 501. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 501 explained.
Questions
Does it handle LIFO or standard cost?
No. Those methods need their own workpaper.
Why is there an item flagged with count above available?
The count is higher than beginning plus purchases, so a lot or the count is wrong.
Related templates
- Audit Program: Inventory
- Lower of Cost or NRV Inventory Test (ASC 330)
- Excess and Obsolete Inventory Reserve Calculator
- Manufacturing Overhead Absorption and Inventory Costing
Last updated 11/06/2026. All free templates.