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    Accounting for a stock item made within the business

    Good Afternoon,

    Kindly assist with the following. We run a convenience store wherein we also sell bags of ice-cubes. We produce the icecubes in-house. My question is how must I bring the "cost of sales" into our books. We are VAT registered and charge VAT when we sell the bags. At the moment its only the selling part at the POS thats recognised hence, having negative stock values on the system.

    Many Thanks for your assistance!

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    Site Caretaker Dave A's Avatar
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    What are your direct input costs in the manufacture of the ice?

    I suspect you are accounting for these input costs elsewhere already (being electricity, water and packaging).

    Using cost accounting principles, you can build up the per unit cost, but you can't double claim the expense - you would need to reallocate it. Ultimately the decision you need to make is how you want to recognise these expenses in your management accounts.

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    Many thanks Dave. I now have some homework to do to determine the per unit cost!

    Again, Thank you.

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