BOP Program Statement 8540.03 § 5

P8540.03 03/18/2015 3

Remote and Prime Business Offices ensure that the administration, review, and validation of cost

of sales activity is performed throughout the month. Locations ensure that the data is accurate

and that the following cost of sales accounts are reviewed throughout the month and analyzed at

month’s end:

■ G/L Account 653200, Inventory Overages/Shortages. Review the impact of cycle counts,

shop stock inventories, etc.

■ G/L Account 653221, Inventory Valuation Adjustment for Finished Goods. Records changes

to standard costs for items in inventory at the time of the change. These result from a

released material cost estimate by the industrial specialist or when price changes are made.

This account is monitored to ensure that prices are not arbitrarily changed.

■ G/L Account 653222, Finished Goods Cost in Excess of 95% of Selling Price.

■ G/L Account 653228, Inventory at Customer – Excess 95% of Selling Price.

■ G/L Account 653282, Inventory Valuation Adjustment for Sub-Assemblies. These result

from a released material cost estimate by the industrial specialist or when price changes are

made. This account is monitored to ensure that prices are not arbitrarily changed.

■ G/L Account 653283, Sub-Assembly Cost – Excess of 95% Adjustment.

■ G/L Account 653288, Work in Process Cost – Excess of 95% Adjustment.

■ G/L Account 653300, Planned Cost Variation. Accumulates variances associated with the

difference between finished goods and subassemblies, carried at standard cost, and the actual

cost of production. This cost is posted at the completion of the production order.

Any activity to cost of sales that cannot be explained is reported to the FFA.