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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: grimes who wrote (197474)	5/18/2006 11:28:36 AM
From: Cravey	Respond to of 275872

Yes, we said the same thing. But your explanation had much more flair!

To: grimes who wrote (197474)	5/18/2006 11:32:38 AM
From: combjelly	Respond to of 275872

"believe inventory is carried at lower of cost or realizable value - in particluar AMD's finished goods inventory would be carried at fully burdened cost" Ok. Still, a packaged and tested die is carried as inventory at a significantly higher price than when it is in the die bank. So if the inventory mix is weighted towards the die bank, then the production of Fab36 wouldn't be visible by examining inventory levels.

To: grimes who wrote (197474)	5/18/2006 12:02:26 PM
From: bobs10	Respond to of 275872

you... The carrying value of work in process inventory is the accumulated cost to get it to its current point of completion. me... OK, it's been a very long time since I was involved in running a manufacturing business, but here's my take. There's a whole branch of accounting, "cost accounting", that is basically concerned with how a company determines whether it's production process are working as planned. What happens is that in the budgeting process the amount of estimated cost in labor, materials and underfoot(accounting joke)per widget is calculated. These costs are used to determine selling prices based on the desired gross margins. During production actual costs are calculated and variances between budgeted costs calculated. These variances are then fed back into the budgeting process to determine estimated costs for the next period. Variances usually arise because things change, ie, materials cost more, or a new labor contract is negotiated, etc. Actual costs are used to value raw materials, WIP and finished goods inventories. The value of the inventory has to be adjusted lower than actual costs if there is a drop in the value based on market conditions for the end product.