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C. LOSS (WARKDOVPTS) OIT ITVEtTORY

 It is not unusual for a. han, .. .ri.';,.facturer 1rvin,_ a volume of
sales of $5u,0,000 during the ,cr'r to find. at the end of the year an
inventory on hand amounting to 425,000.

 This iv'.ventory wvill -orobably consist of some frames and ornaments
which c-n bi de-oreciated -.t le-st,50 per cent inmmcdiately and even 75
per cent if the'- ha)pen to be in small quantities.

 The leather stock inventory is usu!-lly in fall colors, in uneven
color :ssorthients, which cai be depreciatcda 50 per cent.

 Finished goods inventory on hand. usual-ly consists of the lc.st
desirable styles in broken color assortments which can to dcprcciated
from 25 to 50 -)er cent.

 It is s'fe on the avera-ge, therefore, for -nZr manufacturer of
handbags to figure 50 per cent depreciation on his inventory at the
end of the ye-r.

 Unless this .item of $12,500 .l.oss in inventory is figured into the
original cost it is more than li.ecly that vwhat rp- eared to be a
profitr.ble -ye-.r may result in an unprofitable yea.r when the loss in
inventory is cared against the..,-rofits. For example:
 Inventory $25,000
 Less depreciation 50 )er cent 12,50
 Value of inventory on hand $12,500

 Total! yearly sales $500,000

 Estimated Profit $10,000
 Loss on inventory 12,500
 Deficit $ 2,500
 Percentage of loss on sa.lcs 2U.;

 This e::-m 'le may v-.ry with different types of -:-ufacturers ma:ing
different kinds of ba:-s. With sorne, the inventory rm'y be higher and
the 2ercenta-..c of mnarkdowns lower. For example, a maniiaffcturcr may
havE a $50,000 inventory with .a rw rkdovwn of only 25,, de-ncnding upon
the kind and nature of the inventory. The principle involved, however,
must be -1Jlied in every case. Ea'ch manufacturer should c-rcfully
study the conditions in his own particular line.

D. DESIGN OVT- ERAD
 Executive S.alaries (Desi:ning)
 Desi ners Salaries
 Sample 'Iaking Salaries
 SamTiple hIteria-ls
 Raw ivMa.terials used in Desig;ning
 Purchases of Sample 3-s
 Sundry Desibnin-., Ex-iense


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