Note 3 – Inventories

Inventories consisted of the following:


	September 30, 2018		December 31, 2017
Finished goods	$	760,923	$	562,809
Raw materials		33,686		30,346
Work in process		16,173		10,911

	$	810,782	$	604,066

Inventories are valued at the lower of cost or net realizable value. The Company principally determines the cost of inventory using the weighted average method.

The Company estimates retail inventory shrinkage for the period between physical inventory dates on a store-by-store basis. Inventory shrinkage estimates can be affected by changes in merchandise mix and changes in actual shortage trends. The shrinkage rate from the most recent physical inventory, in combination with historical experience, is the basis for estimating shrinkage.