Inventory Accounting and Costing Training Course

Participants can distinguish inventory costs from period costs and accumulate costs by product or process.

• Trace direct materials, direct labour and overhead to cost objects
• Distinguish product costs, period costs, sunk costs and opportunity costs
• Job-order costing records: job cost sheets, requisitions and labour tickets
• Process costing through equivalent units and production cost reports
• Normal, abnormal and mixed costs classified for inventory measurement
• Cost behaviour analysis using high-low method and regression estimates

Participants can calculate, apply and review manufacturing overhead rates using appropriate allocation bases.

• Predetermined overhead rates based on practical capacity and budgeted activity
• Allocate service department costs using direct, step-down and reciprocal methods
• Apply departmental overhead rates where production departments use different drivers
• Calculate underabsorbed and overabsorbed overhead from actual production data
• Dispose of material overhead variances through inventory and cost sales
• Document allocation bases and rate approvals for audit evidence

Participants can select and calculate appropriate inventory cost formulas under IFRS and US GAAP.

• FIFO, weighted-average and specific identification under IAS 2
• LIFO permitted under US GAAP but prohibited by IFRS
• Compute periodic and perpetual weighted-average unit costs accurately
• Reconcile inventory layers, receipts, issues and closing quantities
• Select cost formulas for interchangeable and non-interchangeable inventory items
• Assess consistency requirements when changing cost formula or system

Participants can assign process costs, account for spoilage and allocate joint production costs.

• Equivalent units using weighted-average and FIFO process-costing methods
• Assign conversion and material costs across sequential production departments
• Account for normal spoilage within good units produced
• Charge abnormal spoilage separately rather than capitalising production losses
• Allocate joint costs using physical units, sales value and NRV
• Recognise by-product proceeds through cost reduction or other income

Participants can calculate standard-cost variances and identify operational causes requiring management action.

• Set material, labour and overhead standards from engineering data
• Calculate material price and usage variances with standard quantities
• Analyse labour rate and efficiency variances by responsibility centre
• Separate variable overhead spending and efficiency variance components
• Reconcile standard cost of sales to actual cost results
• Investigate variance root causes using production, purchasing and yield data

Participants can determine allowable inventory costs and assess lower-of-cost-and-NRV adjustments.

• Determine purchase costs, conversion costs and other allowable costs
• Exclude abnormal waste, storage, selling and general administrative costs
• Capitalise borrowing costs only when inventory is a qualifying asset
• Measure inventories at lower of cost and net realisable value
• Estimate NRV from selling prices, completion costs and selling costs
• Reverse IAS 2 write-downs when NRV recovery is evidenced
• Apply item-by-item, category and total-population NRV assessment rules

Participants can design core inventory controls and reconcile physical counts to accounting records.

• Map procure-to-pay, production and order-to-cash inventory transaction flows
• Post purchases, freight, returns, transfers and manufacturing consumption entries
• Design cycle count programmes using ABC classification and count tolerances
• Reconcile subledger quantities and values to general ledger balances
• Segregate custody, recording, approval and adjustment responsibilities
• Test cutoff around goods received, goods shipped and consignment stock
• Investigate inventory discrepancies through recounts, tracebacks and root-cause coding

Participants can prepare inventory analyses and disclosures that explain financial statement effects.

• Prepare inventory roll-forwards linking opening balances, movements and closing balances
• Draft IAS 2 disclosures for policies, carrying amounts and write-downs
• Compare IFRS and US GAAP inventory measurement and reversal treatment
• Calculate inventory turnover, days inventory outstanding and gross margin
• Interpret ageing, slow-moving stock and obsolescence reserve trends
• Assess inventory effects on EBITDA, working capital and operating cash flow

Participants can organise a controlled inventory close and prioritise improvements from accounting evidence.

• Build a month-end inventory close timetable with evidence and control owners
• Resolve a manufacturing write-down case using cost and NRV evidence
• Assess consignment, bill-and-hold and customer-owned stock ownership indicators
• Prepare audit support for costing assumptions, counts and valuation judgments
• Prioritise remediation actions from variance, shrinkage and ageing analyses
• Create a 90-day inventory accounting improvement plan with milestones