Accounting for Inventory Management

On completion of this course you should be able to:

• Gain a wide knowledge of counting systems, cost layering, standard costing, overhead allocation, the lower of cost or market rule, disclosures, transfer pricing, budgeting, and measurements.
• Understand how to improve inventory record accuracy, assign costs to inventory, and set up a complete system of Inventory controls.  
• Apply methods and techniques to create and maintain a comprehensive system of inventory accounting.
• List the various types of accounting activities that relate to it.
• Decide which of the accounting activities are actually needed.

Overview of Inventory

• The Definition of Inventory
• Accounting for Inventory
• Inventory Transactions
• Inventory in a Push Environment
• Inventory in a Pull Environment
• Periodic and Perpetual Inventory Systems

Inventory Record Accuracy

• Inventory record errors
• Environmental and employee factors impacting record accuracy
• Inventory data collection methods
• The data entry blocklog problem
• Back flushing
• Controls over record accuracy
• Inventory review reports
• Inventory Auditing
• The corrective action system

Inventory Counting and Reconciliation

• How to set up inventory record keeping
• The physical inventory count
• Concerns about the physical inventory count
• Physical Count improvements
• Cycle Counting
• Control Group Analysis
• 100% Count Analysis
• Inventory Reconciliation

Standard Costing of Inventory

• How to create a standard cost
• Historical, Attainable, and Theoretical Standards
• How to account for standard costs
• Overview of variances
• Types of variances
• Problems with variance analysis
• Which variances to report and how to report them.

Process Costing

• Overview of process costing
• The weighted average method
• The standard costing method
• The First In, First Out method
• The Hybrid Costing system
• Process costing journal entries
• Problems with process costing

Inventory Spoilage, Rework, and Scrap

• Definition of Spoilage
• Accounting for Normal, Abnormal Spoilage
• Cost allocation of Spoilage
• Definition of Rework
• Reporting and accounting for Rework
• Definition and accounting for scrap

Inventory Transfer Pricing

• Market price basis for transfer pricing
• Adjusted market price basis
• Negotiated basis
• Cost plus basis
• Cost Anomalies
• Pricing problems caused by transfer pricing
• The tax impact

Inventory Budgeting

• The production budget
• Other production budget issues
• Budgeting for multiple products
• Ending inventory concepts

FOR WHOM:

Stores Purchasing and Logistics Personnel in the Public and Private Sectors

TRAINING METHODOLOGY

The training methodology combines lectures, discussions, group exercises and illustrations. Participants will gain both theoretical and practical knowledge of the topics. The emphasis is on the practical application of the topics and as a result participant will go back to the workplace with both the ability and the confidence to apply the techniques learned to their duties.