Principles of Inventory Valuation and Manufacturing Costing for Inventory-Centric Businesses

INVENTORY VALUATION AND PRODUCTION COST CONSIDERATIONS FOR WHOLESALE DISTRIBUTORS AND MANUFACTURERS

Inventory valuation and manufacturing costing features are crucial for whole sale distributors and manufacturers. Entry-level applications like Intuit QuickBooks support limited inventory valuation with marginal features for manufacturing costing. These restrictions often serve as a catalyst, prompting growing companies to move to more robust midmarket ERP systems like Acumatica. However, many companies never consider the importance of inventory valuation and manufacturing costing during their ERP evaluation process. Should you use a simple method like standard cost, or would you be better served by using average costs, actual (lot) costs, first-in-first-out (FIFO), last-in-first-out (LIFO), or a combination of valuation strategies? Each strategy may manifest vastly different corporate financial reporting results. In addition, there are many caveats to the choices you make. Further, some methods produce lower taxes than others.

Larger companies have cost accountants to help them select the best valuation and job cost strategies for their businesses. However, smaller distributors and manufacturers often make these decisions with little input from accounting professionals. Unfortunately, many companies choose the wrong options, which negatively impact their financials and lead to costly conversions to alternate valuation and job cost methods. Lastly, every ERP system features a unique way of supporting each method, and some systems do not fully support all valuation and costing strategies.

This eBook provides an overview of inventory valuation and manufacturing costs. It features detailed examples of each strategy, including each method’s advantages and disadvantages. In addition, the eBook is organized into the 6 categories below and offers guidance to help you select the proper costing and valuation methods for your unique business needs and insights into how different ERP applications support valuation and costing strategies.

• INTRODUCTION
• VALUATION
• JOB COSTING
• CONSIDERATIONS
• ERP SYSTEMS
• FEATURE CHECKLIST

Download the ebook below.

Manufacturing Costing and Inventory Valuation eBook