Provisional estimate of inventories accounted for the difference in material cost calculation and analysis

Abstract: In some of the planned cost costing business, if there is a provisional estimate of a large number will result in a larger current difference between the cost to analyze the case in the form of causes and propose solutions.

Keywords: cost of the project; Zangu recorded; cost difference

At this stage, many large manufacturers of inventory costing is still planned cost, accounted for the presence of a large number of provisional estimate, how to make a provisional estimate of inventories accounted for the difference in the calculation of material costs become a problem.

However, the existing financial system from the hard to find coup. 2006 Ministry of Finance issued a new <<Accounting Standards - Inventories>> and the subsequent promulgation of guidelines which were not mentioned in the application of the Ministry of Finance issued the old .2001 <<Enterprise Accounting Standards - Inventories>> Guide that: "Enterprises should calculate the cost of materials at the end of monthly differences in the rate of formation of the month, according to material cost sharing differences, the material cost difference ratio is calculated as follows: Month material cost difference ratio = ( inventory early this month, the cost of inventory differences + income difference between the cost of inventory) / (the beginning of the project cost + inventory inventory inventory cost of the project this month, revenue) × 100%, inventory cost of the project this month revenue does not include a provisional estimate accounted for inventory cost of the project. "
So it was that the provisions recorded material to a provisional estimate can be solved in the calculation of the difference in material costs, according to the above requirements, the material cost difference ratio is calculated amended to read:
Differences in material costs this month, rate = (beginning inventory + cost of stock this month income differences in inventory cost difference) / (beginning inventory inventory planning inventory cost + income this month, the cost of the project - planned this month provisional estimate of inventory value) × 100 %.

Manufacturing company in 2008 as the main raw materials - soda ash-related data in Table 1:
Differences in rates in September = (46,947.57 +539,468.68) / (782,459.48 +9,751,649.52) = 5.567%;
September requisitioned materials cost difference = 6,164,631.20 * 5.567% = 343,185.02 dollars;
Balance at the end of September +539,468.68-343,185.02 material cost difference = 43,286.25 = 239,569.91 dollars;,
Balance end of September, the material cost difference ratio = 239,569.91 / 46,309.96 = 517.328%;
Rate = difference in October (239,569.91 +285,198.49) / (46,309.96 +5,257,467.20) = 9.894%;
October requisitioned materials cost difference = 6,419,512 * 9.894% = 635,146.52 dollars;
Material differences between the end of October the balance ratio = 239,569.91 +285,198.49-635,146.52 = 110,378.12 dollars.


This produces a very interesting results, early September is the difference between the carrying cost of materials by the poor, September and October are also differences in cost of materials purchased by the poor description of the actual purchase price higher than the planned price, and because costs The result, the end of October the formation of credit check book (the actual price is less than the planned price), indicating that the cost of multi-junction from September to October.

Why this phenomenon? Simple analysis, we will find all the fault of a provisional estimate.

Material cost difference is the rate used to calculate the material cost difference in the opening period and closing stock of inventories between the allocation is based on: the cost of beginning inventory inventory inventory differences + income this month, the cost difference between the cost of inventories this month = stock inventory differences + the end of the cost difference.

Early this month received and calculated the average difference in the rate of inventory in the current issue of inventory and the closing stock price between the planned allocation is to say: the beginning of this month received and the average difference between the stock issue stock issue rate = cost difference ratio = ending inventory cost difference ratio. Links to free download http://www.hi138.com in the absence of a provisional estimate of the case: the cost of beginning inventory + inventory project plans this month to obtain an invoice cost of inventories = this month plans to issue stock price + stock inventory at the end of the plan costs.

And there is a provisional estimate of the case: stock inventory plan early this month, get an invoice cost + inventory cost of the project - the plan last month provisional estimate of inventory stock price + month provisional estimate of the plan this month to issue stock price = price + plans stock inventory at the end of the plan costs.

If the denominator in the calculation of rate differences do not plan to stock prices included a provisional estimate, while the provisional estimate of the month has been requisitioned materials, material costs in the calculation of the month recipients, the provisional estimate of the cost of materials is bound by the corresponding difference in the number of rate away The cost difference will inevitably lead to differences of inventories and more away This method led to differences in the cost of inventories month rate and the difference between the cost of inventory balances month rate is inconsistent and very unreasonable.

Month to resolve differences in the cost of inventories and the rate difference between the cost of inventory balances month rate of inconsistency, it will inevitably require the month provisional estimate of stock price is also involved in planning operations, but the general business in the daily accounting, inventory is only a provisional estimate of the estimated price recorded, no difference, if more month provisional estimate, the difference in the calculation of the rate difference will dilute rate, it will also result in large errors, so I think it is necessary to plan in the provisional estimate of stock price at the same time a provisional estimate of the difference. provisional estimate of the difference involves the following factors:
(1) purchase price: even when the general business inventories have not yet received a bill, also signed a supply contract with the supplier or the agreement can usually be bought more stock correctly priced. The practical operation of the inventory on a single storage column can be reserved by the purchasing department to fill with the contract price or agreed price, calculated each end of all the provisional estimate of the aggregate inventory cost difference, along with the provisional estimate of stock price simultaneously recorded program, participate in the cost calculations.

(2) transportation costs, selection costs, reasonable wear and tear: If the price of shipping relative to the large proportion of available inventory, please provide the amount of freight with the supply and marketing departments, such as a smaller proportion, from time to provisional estimate of this part of the cost to be achieved, when invoices are recorded, little impact on cost.

For some of the stock variety, frequent occurrence of manufacturing, such as supply and marketing department individually to provide a provisional estimate by the stock price recorded work overload, can be simplified method in the case of small price changes, may be based on monthly financial actually get an invoice cost of new inventory to calculate the provisional estimate of the rate difference between the cost of inventory differences, because the month the invoice price and get closer to the market price at the time.

Thus estimate the cost difference ratio, the more accurate we use this method again for the example calculation:
September to take stock of the invoice cost difference ratio = 539468.68/9751649.52 = 5.532%;
September provisional estimate of the cost of storage inventory should also be a provisional estimate difference = 5,257,467.20 * 5.532% = 279,697.26 dollars;
(Assuming storage in August was a provisional estimate differences in the cost of inventories inventory balances end of August, the rate difference = 46,947.57 / 782,459.48 = 6%).

September Reversal of inventory last month, a provisional estimate of the cost difference = 9,580,635.04 * 6% = 574,838.10;
September material cost difference ratio = (46,947.57-574,838.10 +279,697.26 +539,468.68) / (782,459.48 +9,751,649.52-9,580,635.04 +5,257,467.20) = 291,275.41 / 6,210,941.16 = 4.690%;
September issue of inventory cost difference = 6,164,631.20 * 4.690% = 289,121.20 dollars;
Balance end of September inventories cost difference = 46,947.57 +539,468.68-574,838.10 +279,697.26-289,121.20 = 2,154.21 million;
October to take stock of the invoice cost difference ratio = 285,198.49 / 5,257,467.20 = 5.425%;
October, a provisional estimate the cost of storage inventory difference should also be a provisional estimate = 10,501,440 * 5.425% = 569,703.12 dollars;
Oct material cost difference ratio = (2,154.21 +285,198.49-279,697.26 +569,703.12) / (46,309.96 +5,257,467.20-5,257,467.20 +10,501,440) = 577,358.56 / 10,547,749.96 = 5.473%;
October issue of inventory cost difference = 6,419,512 * 5.473% = 351,339.89 dollars;
Balance end of October, inventories cost difference = 2,154.21 +285,198.49-279,697.26 +569,703.12-351,339.89 = 226,018.67 dollars;
Balance end of October, inventories cost difference = 226018.67/4128237.96 = 5.475%.

This calculation results with the actual situation is closer, so the provisional estimate of inventory to participate in the cost difference to the calculation for the accurate accounting of the cost to play an active role. Links to free download http://www.hi138.com