Anyone have a gas station client?

[joanmcq]

This is the first gas station client I've had. Apparently, to get the middle grade of gas, Plus, the station, or pump, mixes Regular with Super to get the proper octane. So I have purchases and beginning inventory for only two tanks, Regular & Super. I have sales of all three.

Gas stations use ave. cost for inventory & COGS. How do I determine, on a monthly basis, what the COGS is for the Plus grade? The owner is clueless. I get detailed reports from the point of sale system for everything, including the COGS for the other two grades. I'm doing monthly f/s, but inventory will only be quarterly. Argh! Client is bugging me for May & now June f/s & I can't figure this one out.

[Jack from Ohio]

If the mix to obtain Plus is 50/50 then it is simple to calculate COGS for the Plus sales.  COGS for one gallon of Plus = cost of 1/2 gallon Regular + cost of 1/2 gallon Super. 

 

Since the gasoline in the tanks uses average cost, these costs will change almost every time a load is delivered.  That will be the challenge.  Knowing how many gallons are in the tank and what average cost is before the next load, then adding and recalculating average cost after the load.

 

If it is a different percentage of mixture, then the whole process becomes much more difficult. 

[DevM]

Here in NJ it is 65/35 (i.e. 65% Regular an 35% premium/super) would make it a Plus.

 

Maybe you should check with your client about the mixture.

[Jack from Ohio]

Also, get a big retainer and charge appropriately for all the calculations you will be doing.

I believe you can make an Excel spreadsheet that will do all the math for you.

[DevM]

FIFO for the Inventory. Take the last Invoice price and End inventory from POS system.

 

I have quite a few Gas station clients here in NJ and PA. PM me if you have any questions.

[Richcpaman]

Joan:

 

Don't over think it ok?

 

Did this client just open the gas station?  If not, was the prior accountant figuring this out?  Probably not.

 

Also, I have done gas stations in the past.  We never tracked the CGS on the Midgrade.  We only tracked CGS for gas and diesel.  

 

Keep the calculation simple, at the beginning on the period, there is X number of gallons of regular and X Number of gallons of premium in the tanks. And you have the wholesale price on that date.  There is the beginning inventory, and the ending inventory calc is the same. Do not worry about price changes, there are too many...  Then you have the invoices from the supplier for what was delivered and billed. 

 

Tell the client that you can figure out what the CGS is for the midgrade, but it will be a guess and expensive to calculate at that.  The usual metric tracked is total gallons sold and the mix of those gallons.   

 

Hope this helps.

 

Rich

[jklcpa]

I also have a gas station client and agree with what Rich and DevM said above.  I use FIFO for the inventory and the POS system and client's summary of gallonage. He knows how many gallons he has in those tanks at the end of each day. It's not that hard to determine ending inventory and see if the cost of sales makes sense.

 

My bigger challenge is that the supplier nets the electronic debits charged against client's checking account for the gasoline purchases against the credit card sales owed back to the client.  There's no logical pattern for how they combine or net the activity. Believe me, inventory and COS is a snap compared to reconciling cash, deposits in transit, and ending payables because of the netting.

[DevM]

Judy,

 

I always get monthly / qtrly and or annual statement from the supplier for the purchase. Add the difference between electronic debit and the statement to sales and offset to purchase. Some electronic debits also include other fees (i.e. Rent, Merchant Fees.. etc) and those are one time fees on a monthly basis.

 

I agree with you about payables as some are COD/next day/3days and so on credit basis, but the statements have a purchse dates on them with the load (gallons) and Total Invoice price. so I don't ask the clients for purchase invoices.

[joanmcq]

If its any help, the client just purchased an existing AM/PM store/gas station.  So if anyone else has one of these, he's using the existing POS system that BP sets up.

[DevM]

It varies by brand. Some have 65/35 and some have 63/37. I do not have any BP clients. Hope sone one answers or the client will need to ask the District rep/manager.

[ILLMAS]

I don't know how gas station accounting works, but can the COGS be estimated by the amount of sales tax paid?

[DevM]

what is the octane on the plus, Regular and Premium.

 

If Regular is 87 octane and premium is 91 and if the plus is 89 than the mixture is most likely 65 % Regular and 35 % Super (that is the minimum you can have) and the max is 60% Regular and 40 % super. If the client does not know, I would more likely to go with 60/40 as it is branded gasoline. Does he get all BP gas loads or does BP mixes with other brand loads.

[DevM]

I don't know how gas station accounting works, but can the COGS be estimated by the amount of sales tax paid?

 

In NJ the Sales tax on gasoline is collected and paid by the distributor and are included in the invoice price, so the Retailers do not pay any sales tax. it depends on the state.

[joanmcq]

All BP.  I just sent him an inquiry, but the 87, 89, 91 sounds right.  I have an AM/PM down the street from me where I buy gas pretty frequently and those numbers ring a bell for me.

[Abby Normal]

1. There's no reason to account for the grades of gasoline. All fuel can be lumped together.

2. Gas stations must inventory gas tanks daily. It's a simple matter to cost it using the last few delivery invoices.

 

I currently have 2 gas station clients and they both use CSS software to do their daily sales/inventory reports. http://css-corp.com/

 

It's DOS but I can still run it on Win8 by using a virtual machine with XP installed. They might have a windows version now and I'm sure there are other software companies out there.

[kcjenkins]

INTERESTING, thanks for sharing that,  I was especially impressed that they have set-ups for so many typical situations, 

 

Type of Business:  

 

Gas Station  

Auto Repair  

C-Store  

Gas & Store  

Gas & Repair

 

That's a resource many of us might want to bookmark, just in case