Paint Inventory

[Doug]

For the last 7 or 8 months we've been having a hack of a problem reconciling our paint inventory. We short-fall just keeps getting bigger and bigger, and GP% lower and lower.

Stolen materials aside, I'm curious how other shops handle their paint inventory....specifically:

1) is your paint costed out by actual calculation or by using a pre-determined formula?
2)Do your painters keep records of wasted paint due to mistakes, redo's,etc? (Accountability issues here)
3)Does your paint supplier do your ineventory or is it done in house?

I'm open for any "been there, done that" input and suggestions.

We are investigating the possibilty of theft problems, of course. My gut feeling, though, is carelessness and lack of control...

Right now we are $6500 upside down on our paint inventory...and getting worse.

Thoughts and suggestions welcome.

Doug

[fburrows]

Doug:
This answer my be too simplistic but this is what we did after years of battling this problem. We decided that for the purposes of accounting that there was no inventory. We simply took the amount we purchased each month and that was our cost of sale. We then paid the painters a % of the profit from Paint and Material. This worked well for us but your milage may vary.

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Frank Burrows
Automotive Business Solutions
frank@autobusiness.org

[Bert]

I have most dealers 100% cost the PBSM account and post all purchases to the inventory account. The resulting credit in the inventory account is then brought to "0"
and the resulting profit posted resulting in a 40-55% GP in the PBSM account. Process wise lining up like colors to prep and paint and painting panels off the car will result in less waste.