Inventory Accounting and Costing

This DIXONTECH course provides a thorough understanding of inventory accounting and costing methods, essential for accurate financial reporting, cost control, and operational efficiency. Participants will learn how to value inventory, apply cost allocation methods, manage variances, and ensure compliance with international accounting standards (IAS 2 and IFRS). The training bridges theoretical knowledge with real world applications for manufacturing, retail, and service industries.

TRAINING TOPICS

• Principles of inventory management and valuation
• Inventory recognition under IAS 2 and IFRS
• Costing methods: FIFO, LIFO, and weighted average
• Standard costing, absorption, and marginal costing
• Variance analysis and cost control techniques

BY THE END OF THIS TRAINING COURSE, DELEGATES WILL BE ABLE TO

•   Apply appropriate inventory costing methods
•   Understand IAS 2 and IFRS inventory requirements
•   Accurately value inventory for financial statements
•   Manage and control cost variances effectively
•   Evaluate production and purchase cost structures
•   Support managerial decision making using cost data
•   Improve operational cost transparency

TRAINING IS TAILORED TO

•   Accountants and cost controllers
•   Financial analysts and auditors
•   Budgeting and planning officers
•   Inventory and warehouse managers
•   Production and procurement specialists
•   Finance professionals in manufacturing or retail

TRAINING METHODOLOGY

The course uses interactive lectures, case studies, costing exercises, and Excel based simulations. Participants will analyze real inventory data, calculate cost variances, and apply inventory valuation models. This hands on approach ensures practical understanding and immediate application in accounting and operational environments.

DAY 1

PRINCIPLES AND FRAMEWORK OF INVENTORY ACCOUNTING

•   Definition and classification of inventory
•   Accounting treatment under IAS 2 and IFRS
•   Inventory recognition and measurement criteria
•   Determining inventory cost components
•   Role of inventory in financial reporting
•   Relationship between inventory and cost of goods sold
•   Case study: impact of inventory valuation on profits

DAY 2

INVENTORY VALUATION AND COSTING METHODS

•   FIFO, LIFO, and weighted average costing explained
•   Periodic vs. perpetual inventory systems
•   Specific identification and standard costing methods
•   Advantages and limitations of each costing model
•   Valuing inventory during price fluctuations
•   Handling inventory write downs and reversals
•   Practical exercise: comparing costing methods

DAY 3

STANDARD, ABSORPTION, AND MARGINAL COSTING

•   Overview of standard and absorption costing principles
•   Allocating fixed and variable production overheads
•   Marginal costing and contribution analysis
•   Cost volume profit (CVP) relationship in inventory
•   Evaluating product profitability using cost data
•   Cost reconciliation and variance identification
•   Case study: applying absorption costing in production

DAY 4

VARIANCE ANALYSIS AND COST CONTROL MECHANISMS

•   Material, labor, and overhead variance calculations
•   Identifying causes of variances and corrective actions
•   Role of variance analysis in performance management
•   Integrating variance data into management reports
•   Using variance analysis for forecasting and planning
•   Cost reduction through process improvement
•   Workshop: variance reporting and analysis model

DAY 5

STRATEGIC COSTING AND INVENTORY MANAGEMENT APPLICATIONS

•   Inventory accounting for decision making
•   Integration of cost accounting with ERP systems
•   Cost flow assumptions and their financial impact
•   Just in time (JIT) and lean inventory principles
•   Inventory write offs and impairment under IFRS
•   Designing cost monitoring dashboards in Excel
•   Workshop: creating a complete inventory costing model