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Hi All,
We have some costing confusion. I've boiled it down to a simple example that I can still not understand.
We are using FIFO, and we add a flat labour rate as a surcharge in the costing sheet for things we make.
We are investigating the proper sub contract solution, but for now we are using an alternate method.
Take an assembly, with a single component. Component is $2, and we need to 5 of them to make the assembly. So when we make one, the cost of the assembly is $12.50 (labour is 25%). this is good.
To facilitate our work around for sub contracting, we amend the production BOM to consume the raw material (components) as well as the sub contracted assembly brought in against a purchase order. We "buy" the subcontracted part "assembly" for $5.
So, the works order consumes 5 components at $2 each, as well as the assembly we purchased for $5. The physical cost is correct at $17.50 each.
However, the financial cost is wrong, and this causes problem as an active price is generated, as well as stamped against the item cost. This means pending costs are using the over inflated cost. The adjustment made subsequently does fix this however. The financial cost when the works order was for 10 is 186.36364, but it is adjusted to the physical cost, which is 175 as expected. We would like to know where the extra 11.36364 came from!
I realise purchasing the assembly, to consume in a works order making the same assembly is somewhat crazy, but until we have the proper solution licked this is what we have to do.
Can anyone enlighten me?
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Can you share the purchase invoice details? Do you probably have multiple currency in the system related to the vendor invoice or reporting currency?
Hi Andre,
Yes, the adjustment was made by running an adjustment from S&W. the purchase invoice was for the same amount, and there were no delivery charges. This is a test only so made it as simple as possible to understand :-)
thanks
Hi Ludwig!
So, basically, we're buying benassy. We actually send the raw material (bencomp) for them to assemble for us, so the cost we buy at represents labour only - $5. We then process a works order to build a benassy, the prodbom for which has 5 x bencomp as standard (per one) and we add benassy in there. We therefore consume all raw material (that we sent the subby) as well as the part itself from the po receipt.
The adjustment you see is a manual adjustment from S&W we did, then WON was previously reported as finished and ended (and the POs were invoiced too)
both benassy and bencomp are stocked items
both are in an item group called FIFO, with various settings I don't understand if I'm honest - what are you after knowing here?
Cost group for benassy is called "Assembly" and for bencomp "component". For us, the latter adds labour (surcharge in costing sheet) when consumed in a BOM, the former does not.
The screenshot I posted was all transactions against the works order I processed to see the problem, I will post another with filter for just the 2 items mentioned above so you can see the full transactions. I would ignore the second works order WON086581 for now - there's something strange and different going on there.
Hi,
There seems to be an adjustment on the assembly. Can you check if the purchase invoice posted related to the contracted assembly had a higher amount? Or probably some additional charges?
Hi,
You mentioned...
[quote user="Finallygonelive"]We are investigating the proper sub contract solution, but for now we are using an alternate method[/quote]
Can you provide some background information on this alternate method?
Can you also explain how the adjustment that is shown in your screenprint is made? Is this the result of a system modification or did somebody post an adjustment in the closing and adjustment form in inventory?
What does the 'benassy' item represent?
Is it a stocked item?
How is it setup (item model group wise)?
What cost group does it have assigned?
Is the cost group included in your costing sheet?
You also applied a filter in the form that seem to hide certain elements. Can you remove the filter and post the complete calculation?
Many thanks,
Ludwig
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André Arnaud de Cal...
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