UK Double write down / depreciation


Joined
Mar 24, 2018
Messages
2
Reaction score
0
Country
gb
So I got a task at hand to calculate COGS and Inventory Costs. COGS is pretty easy, since I can find the value of inventory at specific dates and the purchase amount... This question may seem pretty basic, so bear with me. I know if I take the inventory value, write downs over the year / depreciation / shrinkage will be included, so it goes into COGS. Problem is that I also have the total amount of write downs within the inventory costs, so it appears in two different measures. I am unsure in which measure I should remove write downs.
 
Last edited:

Fidget

VIP Member
Joined
Jan 6, 2013
Messages
527
Reaction score
81
Country
gb
I'm not sure I'm following your thinking. COGS is calculated using established figures. By that I mean that you don't adjust the COGS figure - you adjust the accounts that make up the COGS figure. So if you write down inventory, then it's the written down amount that will feature in your COGS calculation.
 
Joined
Mar 24, 2018
Messages
2
Reaction score
0
Country
gb
Thanks for your reply. I am sorry, I should have given more details. Thing is that, while I have a master degree, its not in logistics, so I am trying to figure it out mostly by intensive googling. Manager wants to know his expenses at the product level, and my plan was to calculate a margin, so he knows what is left to cover administration, marketing and other salaries and fixed costs. Problem is that not much is being recorded, and I have a short deadline. My solution is this: Sales price - COGS - freight out - ((365/inventory turnover) * daily inventory costs percentage) - maybe discount given. Its kinda my own formula, but it should take into account cogs, freight and an estimate of inventory costs based on an average days to sell. Maybe its nonsense. Problem is that write down is both in cogs and inventory costs...
 
Last edited:

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top