my colleague and i own a small manufacturing business. we have put together a financial tool for projections, budgeting, etc. our inventory purchase is based on average cost of goods, but ACTUAL cost of goods could vary from month to month (i.e., we must purchase a 100 lb drum of raw ingredient, when we only need 2 lbs for our product blend. our cost of good is based on the usage of 2 lbs of raw ingredient, not the min purchase of 100 lbs.)
how does one accurately account for excess, but necessary inventory purchase in a proforma? the numbers eventually factor accurately, if ammoratized over 12 months. However, in its infant stages we must track accurately on a monthly basis our cash flow needs and this tool isn't cutting it.
any ideas?