I recently took over the position at my company as the Controller/Accounting manager of a small manufacturing company. We do about $10 to $12 Million dollars a year in sales. We did not have a controller in my position in for about 4 months until I arived on the sceen.
My question is, I have been diging into the problems we are having and I found out that our Inventory was valued at, "Standard Cost." Now, I know this is not a proper method approved upon by the IRS or FASB, however my boss, the President thinks it should be that way.
Now my inventory starts out at Cost in the Raw Material stage, but manifests into other costs and over states our inventory. By the time it hits Finished Goods the cost of the material has went from $20 per item to $45 per item, and Direct Labor and Overhead are factored into this cost.
I'm asking professionals for some form of advice on how I should handle the $787,000 varience that I am dealing with. Does anybody have any idea what I should do then from this point forward?
Thank you for any and all help I can get.
Travis
My question is, I have been diging into the problems we are having and I found out that our Inventory was valued at, "Standard Cost." Now, I know this is not a proper method approved upon by the IRS or FASB, however my boss, the President thinks it should be that way.
Now my inventory starts out at Cost in the Raw Material stage, but manifests into other costs and over states our inventory. By the time it hits Finished Goods the cost of the material has went from $20 per item to $45 per item, and Direct Labor and Overhead are factored into this cost.
I'm asking professionals for some form of advice on how I should handle the $787,000 varience that I am dealing with. Does anybody have any idea what I should do then from this point forward?
Thank you for any and all help I can get.
Travis
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