Document k9M3OO1ZYV8pN8XVRXdr2rKzq
US'
10: * Copies to:
D. Massiss;
D. Gattsp r M. Klein? j.,-, , T. Reilly
,,
Subject:
LIFp Related Inventories
- f
INTER-OFFICE MEMORANDUM
File Ref.: Date.From: Div./Dep't: Location:
July 28, 1975 R. Hagen RUCO/Contro Her Burlington, New
Doufel^:, extension of June 25, 1975 LIFO related inventories provided therfoliowingti^lances:
G/L EIFOActual.-.;';
Wri-Down
Inventories
Reserve
4,205
12/31/74 1,316
3,767
6/25/75 1,037
<__438
279
Net Adjustment
159
Th^tjgtite-down.of inventories is (438). This is a combination of 305 excess ;IFGj^rite-up on 12/31/74 over standard, which should have been set ijp-jan^ '^nprtized over the current year, and 133 inventory writedown ,,due ,,to actual values at 6/25/75 being less than standard at that dafeata. Adjustingfdt the 305, the net LIFO effect for 1975 would be a pick up jin.earnings of 146. That is, LIFO adjustments 279 less the corrected inventory write-down; 438 - 305 = 133. The. attaejig.d.observations track the many adjustments needed to properly state-;the;.inventory accounts.
TVR. F. Hagen /
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#QftM NO* 81-088
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OCC 016420
1
* #1
Basic LIFO adjustments incorrectly stated and executed @ 12/31/74:
Eer G/l. KFTEO l&wenteardes @ FIFO Less- LIFO Reserve Inventories' @ LIFO
Should Be Was Correction
3,559 1,016 . 4,575 1,316
3,559 976
4,535 1,276 3,259
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+ 40 + 40 + 40
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i
*
*2 19741 FIFO inventories were valued in excess of standard as follows:
Raw-Material Finished Goods
Tdtal-
Standard
FIFO
Excess Value
500 481 - 19
211 535
324
711 1,016
305
, - j!
Since'RSw-Material values at standard are closely matched to FIFO, we can-safely assume that the excess is attributed to overheads capitalized in.Finished Goods.
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OCC 016421 r*
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#3 Inventory accounts at 6/25/75 must be restated for Fact #1:
Are Correction Should Be
Polymers Film & Sheeting
Total LIFO Reserve Wet Add Shrinkage Reserve LIFO Inventory
2,681 1,273 3,954 . 1,276 2,678
187 2,865
(10) 50 40 40
-
-
2,671 1,323 3,994 1,316 2,678
187 2,865
#4 Comparison of 6/25/75 inventories standard with General Ledger:
RESIN Raw Material Finished Goods
PELLETS Raw Material Finished Goods
DRY BLENDS Raw Material Finished Goods
FILM SHEETING Raw Material Finished Goods
TOTAL Raw Material Finished Goods
TOTAL
Quan X Standard G/L Diff.
122 102 + 20
907
907
-
335 .819
370 35 819 -
370 104
1,114 126
*
319 110
1,120 126
+ 51 -6
6-
1*941 1,956
3,897
1,911 1,962
3,873
+ 30 -6
4- 24
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OCC 016422
General Ledger balances must be adjusted for P/u in physical in Total Inventories*
(See comparison of 6/25 Act @ std to Ledger)
And Restated @ FIFO for comparison FIFO Inventory @ 6/26/75
2,865 4 24*
2,889 1,316 4,205
In order to analyze change in inventories, we restate 6/25/75 FIFO inventories to standard per Fact #2:
FIFO Inventories @ 6/25/75 Less Excess Value Added Above Std. 6/25/75 Inventory @ Standard
4,205 - 305 3,900
Profile of 6/25/75 inventories:
G/L
. Adjust LIFO to FIFO; Add LIFO Reserve
Inventories FIFO
FIFO 4,205
@ Std. 3,900
e LIFO 2,730
1,037 3,767
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OCC 016423
#8 Difference between inventories:
RESIN Raw Material Finished Goods
PELLETS Raw Material Finished Goods
DRY BLENDS Raw Material Finished Goods
FILM. & SHEETING Raw Materials Finished Goods
PRESS POLISH Raw Material Finished Goods
@ Actual
@ Std.
Difference
115 910
322 764
355 159
991 129
20 . 2
3,767
122 907
335 819
370 104
1,105 123
8 3 3,897
-7 +3
13 - 55
15 + 55
155 +6
+ 12 -1 _ 130
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HPH/fcw '7/25/75
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OCC 016424