Key accounts such as inventory for Fisher & Paykel’s largest manufacturing unit and its reconciliation and timely resolution of variances is important in ensuring that accurate costings are performed for manufactured goods. Error in costings can have significant impact on the margins across the other Business Units and the group as a whole. The inventory raw materials variances were identified and resolved in the prior year review and have continued to reoccur in the current year but have not been cleared.
The inventory store variances are of immaterial amounts however need to be investigated and resolved in a timely manner to avoid a build-up of variances over various accounting periods.