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Investigating Cost & Variance Product Growth

Investigating Cost & Variance Product Growth

This articles provides insight and investigation tips to cost and variance product growth.

What does N/A mean in the Days on Hand column of the Cost and Variance report?

When Actual Usage is negative, this indicates that you have grown the product.

  • Beg Inv + Purchases End Inv

When Days on Hand is calculated using negative Actual Usage Units, the result would be negative. Instead, it is displayed as N/A.

  • End Inv / ( Actual Usage in Ending Inventory Week / Days in Ending Inventory Week )

 

What is Product Growth?

Definition

Simply put, product growth is negative usage; when the difference of ending and beginning quantities for any given period is greater than the amount of product received in purchases for the same time period. This is in contrast to the usually expected positive usage where the difference between inventories is covered by purchased quantities.

Calculation

See below for examples of how the Cost of Goods Sold calculation can end in negative usage

Cost of Goods

Beg Inv

+

Purchases

End Inv

=

Actual Usage

Example 1

10

+

5

20

=

-5

Example 2

10

+

-10

10

=

-10

Example 3

0

+

0

20

=

-20

 

Where would I see this in reporting?

Cost and Variance

  • – Actual Units

  • (Actual $)

  • <