Inventory valuation
Import freight costs had to be accounted for quickly and accurately without disrupting warehousing and logistics.
Accurate costing without disruption
Stakeholder training
Procurement, warehousing and other teams trained on which costs can be capitalized under accounting standards.
Cost drivers and per-unit rates
Overhead cost drivers identified, a capitalizable cost per unit set for each product line, with a quarterly actual-vs-capitalized review.
Systemized freight capitalization
A system process that capitalizes freight using historical values from similar imports.
Variance threshold agreed with auditors
An acceptable threshold for freight and purchase price variance between actual and capitalized costs.
Threshold-based adjustments
Within the limit, differences go to P&L; beyond it, they adjust the cost of inventory on hand.
Normal loss mechanism
A normal loss calculation so inventory costs are capitalized in line with accounting standards.
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