ON Attain 3.60 - Question? I have a finished product (Fin) made of to components (Com1) and (Com2) and all the products are set to Fifo costing method. I purchase(receipt only) the 2 products Com 1 at Expected cost £5.00 ans Com2 at Expected Cost £2.00. I then make some of the finished goods (Fin) by using Bom jnl. Sell the finished goods! Then the invoice for the components item comes in and the actual cost is different from the expected. My question is how do you configure the system so that the Sale Item ledger entry of the finished goods is updated with the correct rolled up cost of it’s 2 components? Is this possible??? Have i made myself clear???
Andrew As far as I am aware (and please correct me if i am wrong anyone!!) - the adjust cost item entries batch job does not update the costs of finished goods if they were made up from component parts of an inventory BOM. The cost of the finished goods is always the sum of the previously calculated costs (that was set when you manually updated the cost on the finished goods or ran the “Calculate std cost” function on the item card. The adjusted costs of the component parts would therefore be posted in the general ledger to the inventory adjustment account, instead of the COGS account when the items are sold. Hope this makes sense… Alison
I don’t know if I’m way off base here but to correct our costs we try to run as often as possible in Inventory->Periodic Activities->Adjust Cost-Item Entries. Then we run Inventory->Periodic Activites->Post Inventory Cost To G/L. It corrects our costs.
Alison thank you it does make sense (I think) This is what i was worried about, would it then be a case of doing manual adjustments to get COGS then??? Would this also then be a situation of the Profit amount on the sales invoice/Order would also be over or understated???
I am also guessing that this is a very good arguement for using Standard costing on Assembled items!!
Its one of the reasons most manufacturing companies use standard costing and account through PPV’s [:D]
Purchase Price Variances (sorry!) [:D]
Also the reason a lot of companies use standard costing is because they have never had the tools to do anything else. Andrew - It might be worth your while having a look at the manufacturing options in 3.60 as an alternative to BOM journals. In its basic form it doesn’t have to be too compolicated and it would give you more options and sophistication in relation to costing.
Cheers Thanks for the help guys might need to do a bit of client arm twisting then!
Hi Adam I would disagree with you, but its only a matter of opinion [:D]
I have an Add-On that rolls up FIFO costing on standard BOMs called Stock Manager. I havene’t updated it to 3.xx, but could if it helps.