Case study · Inventory

Inventory valuation

Import freight costs had to be accounted for quickly and accurately without disrupting warehousing and logistics.

What we did

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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