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I purchase a raw material from one vendor which is then sent to another for a second process before being delivered.
The first is kilo tracked and included in the relevant BOM's.
The second is a processing service and orders are raised as a GL line on purchase orders.
Both are completely separate from each other and are invoiced accordingly.
How can I incorporate the processing cost into the raw material item so both costs are pulled through?
At the moment we are journalling material out at the lower cost and then back in at the higher cost to include the additional processing cost.
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Writing off the material and receiving it back at a higher cost is not the best option. I would recommend to use Item Charges to distribute the additional service cost to the initial cost of this raw material, when you booking the service invoice from second supplier.
This is more of Subcontracting Orders. Have you tried using Subcontracting worksheets and checked the costing.
If not, you can use the Item Charges to load the proper cost on the raw materials (Service Cost - Instead of G/L, use Item Charge).
Hope this helps.
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