[Anonymous]

Hello! I am currently working for a mid-size company. We manufacture paint, mud&texture and other products. The company started as as a mom-and-pop business. Now we have 20 stores and 10 manufacturing plants. I have to admit our system is very outdated but I am working here while I get my CPA. ( I always get out at 4:45pm) 🙂

I was curious how other companies calculate their inventory. We use the perpetual system but we don’t have a bar code system. We constantly rely on our employees to submit their count sheets for our finished good products. (Some people can’t count) We don’t have a cost managerial department. Our manufacturing cost for all our products seem to based on our one of our best selling product. Basically we are using the same estimate for direct labor, overhead cost. -_-

I think it should be done differently but I don’t have experience in a manufacturing company.

How do you guys calculate direct labor and manufacturing expenses? Do you guys have a bar code system? What kind of system do you suggest? This is my first job in a manufacturing company. Any tips??!!

[ohiostategirlcpa]

Check out the CMA cert. They will teach you all this and more. You are asking for the contents of a semester long course.

F91 A95 R90 B94
CMA since 2015
(Gleim books/PDFs, MCQs, SIMS)

[Missy]

The way you describe inventory and cost accounting in reality is the way it's usually done. A bar coding system is a nice plus but fairly expensive to implement, few companies go that far because many use old accounting software and such a system usually has to be upgraded as well so the costs outweigh the benefits. As for applying direct labor, depends on the type of manufacturers. I've seen as simple a system as people keeping pen and paper logs of their time. For a private business the main reason to make a change in cost accounting method is if the company isn't profitable and needs to see if it's pricing it's goods too low. If there's profit few companies will bother, even realizing the profits could be better.

Old timer,  A71'er since 2010.

Finance manager/HR manager

 

 

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[jeff]

I have a question abt ur choice of title 😉

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Anonymous]

Thank you guys! That's very helpful. I will look into it.

@Jeff- I am sorry! I didn't know how to edit the tile. :'(
I got your attention! Haha

[Author]

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