Vantage & throughput accounting

Yahoo Archive
1
Hi Rick,

Our management have similar concerns regarding the costs
contained in inventories.

In order to bridge the gap between the kind of analysis a manager
might use and the sort of accounting you must do in order to be in
compliance with IRS rules, we had to develop new methods.

We developed a set of burden rates and assigned labor rates to the
various operations performed in our shop. These are the cost drivers
as applied by Vantage.

Then we went on to develop several reports which analyze the on-hand
inventories for their respective cost elements.

This allowed us to use those costs elements as appropriate depending
on which type of accounting information we needed to provide.

The most difficult thing for us was the adjustment we had to go through
in swimming back to the surface of the flood of data that Vantage provides.

Lots and lots of numbers, but very little insight in how the business was
changing, until after we learned how to summarize the data and throw out
the elements that weren't helpful in running the business.

We use Average costing, so the on hand values as expressed in Vantage
are quite dynamic. Some windage has to be applied to deal with that, but
once that hurdle is cleared, Vantage is a big help in capturing all the
costs
for all the items in inventory. Then you can throw out burden, or labor, as
you see fit.

Mike

-----Original Message-----
From: Ludwig, Rick [mailto:RickL@...]
Sent: Friday, June 06, 2003 8:13 AM
To: 'Vantage@yahoogroups.com'
Subject: [Vantage] VANTAGE & THROUGHPUT ACCOUNTING


For all you accounting gurus,

Does anyone out there have experience with "throughput accounting" and/or
using it in combination with Vantage? Our company president wants me to
convert to "throughput accounting", however, I am scared of the future
ramifications. We just turned the G/L inventory interface on several
months
ago and are still working out some kinks, but now he wants to rethink how
we
account for inventory (a premise of thoroughput accounting is that you DO
NOT capital labor, overhead, and material as they relate to inventory). I
believe my first attempt will be to leave Vantage alone and merely
"convert"
our income statement, using the WIP/Inventory Reconcilation report, to
"uncapitalize" the month's financials to an Excel spreadsheet.

Any thoughts or assistance would be appreciated!

Sincerely,

Rick Ludwig

Vice President of Finance & Administration
Metal Spinners, Inc.
Angola, IN 46703
DIRECT (260) 665-2192 x225
FAX (260) 665-5327


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[Non-text portions of this message have been removed]
2
For all you accounting gurus,

Does anyone out there have experience with "throughput accounting" and/or
using it in combination with Vantage? Our company president wants me to
convert to "throughput accounting", however, I am scared of the future
ramifications. We just turned the G/L inventory interface on several months
ago and are still working out some kinks, but now he wants to rethink how we
account for inventory (a premise of thoroughput accounting is that you DO
NOT capital labor, overhead, and material as they relate to inventory). I
believe my first attempt will be to leave Vantage alone and merely "convert"
our income statement, using the WIP/Inventory Reconcilation report, to
"uncapitalize" the month's financials to an Excel spreadsheet.

Any thoughts or assistance would be appreciated!

Sincerely,

Rick Ludwig

Vice President of Finance & Administration
Metal Spinners, Inc.
Angola, IN 46703
DIRECT (260) 665-2192 x225
FAX (260) 665-5327
3
Rick,

I guess you are in quite a pickle. I am not familiar with "Throughput
Accounting" but I did a little quick research and must note that this is
"Management Accounting" and not "Financial Accounting."

Have you been able to address how you will do your external reporting? I
think this will make it very difficult to do financial statements, assuming
you report I/A/W GAAP, and your tax returns.

I think I would start with the approach that Vantage should drive GAAP
information through to the G/L, because that would be very difficult to
recapture. Next I would look into creating reports, that will give
management the info they require/desire for "Throughput Accounting."

I firmly believe that management reporting should not destroy your financial
reporting. This cripples the organization as whole, even though only the
accounting people realize it. Management reporting does not need to be
reflected in your G/L, because that is the basis of your financial
reporting. Management reporting should be sifted from the wealth of
information collected from the IS so management has the basis for good
decision making.

Edward F. Fox, Jr., CPA
Controller
Maxson Automatic Machinery Company
Phone: 401-596-0162 x110
Fax: 401-596-1050
www.maxsonautomatic.com


-----Original Message-----
From: Ludwig, Rick [mailto:RickL@...]
Sent: Friday, June 06, 2003 9:13 AM
To: 'Vantage@yahoogroups.com'
Subject: [Vantage] VANTAGE & THROUGHPUT ACCOUNTING


For all you accounting gurus,

Does anyone out there have experience with "throughput accounting" and/or
using it in combination with Vantage? Our company president wants me to
convert to "throughput accounting", however, I am scared of the future
ramifications. We just turned the G/L inventory interface on several months
ago and are still working out some kinks, but now he wants to rethink how we
account for inventory (a premise of thoroughput accounting is that you DO
NOT capital labor, overhead, and material as they relate to inventory). I
believe my first attempt will be to leave Vantage alone and merely "convert"
our income statement, using the WIP/Inventory Reconcilation report, to
"uncapitalize" the month's financials to an Excel spreadsheet.

Any thoughts or assistance would be appreciated!

Sincerely,

Rick Ludwig

Vice President of Finance & Administration
Metal Spinners, Inc.
Angola, IN 46703
DIRECT (260) 665-2192 x225
FAX (260) 665-5327



Useful links for the Yahoo!Groups Vantage Board are: ( Note: You must have
already linked your email address to a yahoo id to enable access. )
(1) To access the Files Section of our Yahoo!Group for Report Builder and
Crystal Reports and other 'goodies', please goto:
http://groups.yahoo.com/group/vantage/files/.
(2) To search through old msg's goto:
http://groups.yahoo.com/group/vantage/messages
(3) To view links to Vendors that provide Vantage services goto:
http://groups.yahoo.com/group/vantage/links

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/