Costs of Goods

We are having an issue with the cost of goods. We have a two level BOM with componets we buy and have them directly sent to a manufacturing facility to assemble … example

Company A - Assemble and supply box for 5000

Company B - Sells us the componet for 5000 and drop ships to company A

Company C - Sells us the componet for 2500 and drop ships to company A

We pay ABC individually. How can we cost the part that we buy from Company A @ 12500? We turn around and sell it for 25000?

We need to consume the inventory that we sent to company B/C and put it into the part from Company A

Any ideas?

What costing method are you?

What does the BOM look like or is it not actually in NAV?

You mention sending the components to B/C but you state they sell you the component and ship it to company A which does not really sit together, could you explain if you free issue to B and C first, or if they sell them as a drop shipment?

We are going to be using Average costing.

It is still in engineering, so it is not in Nav yet. But I have to put it into Nav soon.

We buy the componets from B/C, and have them drop shipped to A, we cut a PO to B/C and receive them into Nav when they arrive at A. So B/C sells them as a dropshipment.

Well you will not be drop shipping the goods as NAV knows it.

It is difficult for me to fully comment without knowing it in depth. However I would probably purchase the components from B/C and receive them into NAV in a specific warehouse. I would then load a works order for the product, this would consume the items from the warehouse and within the routing would be a sub-contracting operation to assemble the box with Company A. In this way the item has the sub-contracting cost of 5000 whilst also consuming the raw materials direct shipped for 5000 and 2500, making your COGS correct.