Cost Accounting question

[Kevin Sevcik]

Originally Posted by ebarker

You can go to a site like
http://www.metalsdepot.com/
and figure out the cost of metal. Then calculate the amount that you actually used on the robot on a per item basis. That is from rule <R51>

So if you go buy some titanium off of ebay for 10 bucks and the material is worth 250, but you only used a fifth of the material, then your cost basis it 50 bucks, even though it cost you only 10 bucks.

Ed,
I think you're right on about the cost accounting for buying off ebay. If the ebayer doesn't qualify as a VENDOR (and I don't think any do) then the correct thing to do is cost your part based on a price from McMaster or another VENDOR.

Please be careful about your advice about pro-rating. There was a discussion prior to last season about this and (I believe) the consensus was that you could prorate down to the smallest commercially available amount. This is opposed to your example of only using 1/5th of the price if you use 1/5th of the material. The appropriate example is that if you use 6" of a 3 foot length of titanium that usually costs $250, then you could prorate to the cost of a 1' length (assuming a 1' length is the smallest amount you could find).

This makes more sense when you're talking about things that really don't come in arbitrary amounts like, say, tubs of exotic resin for carbon fiber. If the smallest commercially available amount is a 50 gallon drum, it doesn't matter if you only use 2 ounces.