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Price Testing Inventory - Manufacturing

Posted on by 40

Looking to hear how others are doing price testing of their manufactured items.  Some of our inventory items are made up of multiple manufactured sub-components and I feel like we end up down in a rabbit hole looking to justify our inventory cost and it takes forever.  Is there a good report or way to capture all the costs that go into a part and then the associated raw material invoices?  We do everything in FIFO.

  • Liz McQuiston Profile Picture
    Liz McQuiston 40 on at
    RE: Price Testing Inventory - Manufacturing

    This report helps immensely, thank you!

  • Ben Baxter Profile Picture
    Ben Baxter 4,892 Super User 2024 Season 2 on at
    RE: Price Testing Inventory - Manufacturing

    Liz,

    There are several reports related to "Cost Share" that I would suggest you review to see if it gets you closer to the information you need.  This is a standard BC report, so you may need to copy it and add additional detail to satisfy your auditors.

  • Inge M. Bruvik Profile Picture
    Inge M. Bruvik 32,748 Super User 2024 Season 1 on at
    RE: Price Testing Inventory - Manufacturing

    The cost that is rolled up to your finished manufactured product will be determined by the costing method you use for the raw material.

    And as long as you for example use fifo as costing method for your raw materials and not use reservation there is no way you can really be sure what exact purchase was consumed in production of that specific finished item /finished batch. That will only be possible if you use some kind of item tracking.

    With out item tracking you will have to relay on your costing method and trust that the system will keep track of what is the correct cost for the finished product according to the costing method of all your raw materials.

    For example with fifo costing - the system will apply cost according to fifo - but with out item tracking you can not be certain that the physical inventory is handled according to fifo.  There is nothing that will prevent the physical inventory handling of raw material differ from the costing methods handling of the cost as long as you do not use item tracking.

    So you can create a report but it will be a theoretical report according to the defined costing method.

  • Liz McQuiston Profile Picture
    Liz McQuiston 40 on at
    RE: Price Testing Inventory - Manufacturing

    Thank you Inge what I am looking for is a report or a way to locate what purchase invoice the raw material came from for a manufactured part.  When our auditors come in to verify inventory they want to confirm that we are holding it on inventory at the correct cost.  They want to see the invoices that make up all the costs that went into a part.  It's very time consuming to drill down into every selected part and go back through all the transactions to find the pricing and the associated invoice copies.  I figure other manufacturing plants are required to do this with their auditors too so I'm looking for how they provide this detail.

  • Inge M. Bruvik Profile Picture
    Inge M. Bruvik 32,748 Super User 2024 Season 1 on at
    RE: Price Testing Inventory - Manufacturing

    I am not sure if I understand your question correctly. But basically there are two ways you can associate a specific batch of raw material to a production and that is either by using item tracking so you assign each purchase to a batch. The other way is to use reservation so you reserve a  specific item receipt to your production order.

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