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Converting standard cost item to average cost item for product substitutions

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Posted on by Community member 6
Hello,
 
We have some items in our company that use standard cost (manufactured items) and others that use average cost (purchased items).  Sometimes we need to use a manufactured (STD) item as a substitution for a purchased item (AVG) to fulfill customer orders.  
 
Since the part that it is becoming is an average cost, purchased part, we cannot put a production order on to capture the labour and convert the manufactured, standard part into the purchased part. 
 
Is there a way to convert these parts and capture the costs?
 
Thank you!
Categories:
Procurement and Sourcing
Cost Management
  • Suggested answer
    Nigel J Cox Profile Picture
    Nigel J Cox 40 on at
    Converting standard cost item to average cost item for product substitutions
    I hope I am understanding your issue correctly! Have you considered making the Item a BOM item (and providing a BOM and Routing) BUT selecting Purchased on the default order settings? This would plan for Purchasing in MPS but permit you to manufacture, I believe. I haven't tested whether the system will let you update a Released product to type BOM, but I suspect it will . . .
  • Guy Terry Profile Picture
    Guy Terry 28,395 on at
    Converting standard cost item to average cost item for product substitutions
    You could create a new BOM item, which is average costed. This being the item you sell when the purchased item is not available.
     
    You could create a production order to produce the new BOM item, which will capture cost of repackaging the standard cost item, and also consume the standard cost item (and could consume any packaging items as appropriate).
  • Community member Profile Picture
    Community member 6 on at
    Converting standard cost item to average cost item for product substitutions
    Hi Andre,
     
    We are currently subtracting the manufactured items from inventory and adding to the purchased item.  The concern with that is that the costs between the two are different, so finance is seeing a variance, and that method does not capture the labour involved in repackaging the manufactured item to use as the purchased item.
     
    Ideally we would love to have a production order that could be scheduled, capture the labour, consume the manufactured item as a BOM component, and report as finished to increase the inventory of the purchased item.  That's where we get stuck because I don't see a way to add a BOM to a purchased item, so we are looking for other methods that could capture those costs and make a clear trail for finance.
     
    Thanks!
  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 288,768 Super User on at
    Converting standard cost item to average cost item for product substitutions
    Hi,
     
    Can you explain your envisioned process for using another product as a substitution in case you can't deliver the original ordered item? Are you changing the order or do you want to post an inventory journal to subtract the manufactured items and increase the on-hand for the purchased item?
  • Suggested answer
    BillurSamdancioglu Profile Picture
    BillurSamdancioglu 13,216 Super User on at
    Converting standard cost item to average cost item for product substitutions
    Hi,
     
    Have you considered to use batch or serial number?

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