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izzyhdci

Bill of Materials and Transfers

Posted By

I just want to bounce some thoughts around. We're a manufacturing and distribution company. We are trying to take into account how many boxes we use for packing our finished goods. These finished goods are sold to our intercompany via p.o and receipt of goods. In the Bill of Materials we have the item code for the box included in the recipe. We only started adding the box. My thought is that it's incorrect because each finished item doesn't get a box, 12 items get a box. So essentially if we produce 1200 bottles of the finished good the bill is set up to pull 1200 boxes correct? We don't sell from the intercompany by cases we sell by individual/each. The other part of this tangle is that manufacturing has also been doing a transfer/adjustment to account for the boxes that are leaving manufacturing via the production. I don't want to create a separate bill of materials for cases of the finished good since we sell the product to the end user by individuals. Any thoughts?

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  • 0

    If the box cost is not a concern, and you just want to consume the quantities properly, you could do an Inventory Issue transaction (which allows you to set a GL account in the transaction line for the expense).

  • 0 in reply to Kevin M

    Is doing it both ways (BOM and Inventory Issues) double dipping? I think their logic was to also calculate the cost of the boxes.

  • 0 in reply to izzyhdci

    Correct, you'd only want to do one transaction or the other. 

    Added as a BoM component seems easier but might not work perfectly when not producing multiples of 12.  If you made 6, you'd still consume a box, but the calculated quantity would be about half a box, which is not possible in real world terms.

    Manually counting what is consumed, and doing an inventory issue will get the most accurate numbers, but the inventory value would not flow into the item (assuming cost tier valuation of the finished goods) and into the invoice's COGS (which could only be done by adding the cost during production).

    So, if costs flowing into the finished goods value is important, BoM is the only option to do that... while watching for part box counts being calculated correctly.  (I think there may be special Sage programming for UoM of "EA" or "EACH" to do that automatically).

    If costs are not important, the II option would lead to more accurate inventory consumption, since you'd basically be entering the exact count of what was used (in a separate transaction).

Reply
  • 0 in reply to izzyhdci

    Correct, you'd only want to do one transaction or the other. 

    Added as a BoM component seems easier but might not work perfectly when not producing multiples of 12.  If you made 6, you'd still consume a box, but the calculated quantity would be about half a box, which is not possible in real world terms.

    Manually counting what is consumed, and doing an inventory issue will get the most accurate numbers, but the inventory value would not flow into the item (assuming cost tier valuation of the finished goods) and into the invoice's COGS (which could only be done by adding the cost during production).

    So, if costs flowing into the finished goods value is important, BoM is the only option to do that... while watching for part box counts being calculated correctly.  (I think there may be special Sage programming for UoM of "EA" or "EACH" to do that automatically).

    If costs are not important, the II option would lead to more accurate inventory consumption, since you'd basically be entering the exact count of what was used (in a separate transaction).

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