A question

[ADpizzaguy]

I have a question concerning inventory. I know how to get a variance total, but how do I get a cost variance. Does what we sell the product for have any factor? I know that what we pay for it does. But how do I get a cost factor?

 

[Patriot_sPizza]

As an X-Auditor, I’m not quite sure what you’re looking for - COG is a simple math formula - yes, your individual prices may rise & fall, & that may be of interest to you, but…when your costs are too high, it is generally over-portioning, theft etc…

As an X-Auditor, many folks don’t do a real physical inventory, on a consistent basis, hence poor data…

Looking at some of the data from your POS may tell you some things, but nothing reveals the truth like a real physical inventory…

I use QuickBooks & do a simple inventory every few days - just to keep my eyes focused…if you wait 'till the end of the month to discover you have a problem, you’ll still have that problem next month…

 

[ADpizzaguy]

I agree about doing a physical inventory. i really wish I could get the owners to invest in an inventory software system so that I could inventory everything so that I can better understand costs and control them. Right now I am taking inventory on bottled soda and beer. What I want to know is… do I use the price that I pay for an item to get the cost variance or do I use what I sell that item for? Up until now, I’ve had inventory software and didn’t really have to think about the math. I have the inventory variance down, but I am curious as to how to get cost variance. Thanks for your help.

 

[Wizzle_Wassell]

cost variance = Cost of goods actually used - cost of goods that should have been used.