How to include non-stock item cost in Production Order

Hi all,

My company’s situation is that we always ship products with a set of manual and CD. As considering the paper and CDR are also used in office (i.e. not for the selling product), we didn’t create any item master nor purchase order for the purchases, and thus, no stock is kept for these 2 items in the system.

But our finance considers capturing a standard cost for paper and CD as the manufacturing cost for the product. Any idea on how to approach this?

Should we consider creating item cards for the two items, but always keep it as negative stock? But will this less the product cost in the stock keeps decreasing?

Appreciated for any of your suggestion.


This really depends. [:D]

In the standard costing environment your production will be creating variances, finance will be analysing these and they can attribute a set percentage of this down to the cost of the paper and CDR. However you cannot ship the goods without the CD, so perhaps this should be stocked, it depends upon the cost contribution. It also depends upon teh auditing and process documentation - how do you know you need paper and a CD, because the system does not, etc. If you want full control then yes the paper and CD would need to be there, you will also have to keep inventory and control it, as you would with any component part in production. This will get your costing better and lead to better inventory control.

Personnally I would have them in the BOM to ensure the variances are easier to identify and the people doing the job know what they need. I would not consider the auto-consumption of stadnard materials as a onerous task!

If we create the item cards for paper and CDR and put them in the production BOM, can we let them having zero / negative quantity?

Will this lead to a wrong manufacturing cost? We use weighted average for all items. Or if we can set the two items with standard cost, is this a suggested way to do so?