Hello,
We produce a single product by combining three different inventory materials, and then place it in a plastic bag before putting it into our stock. The plastic bag is not an item kept in stock. How can we reflect the cost of this plastic bag?
Thank You for Your Insight..
+13
Don’t know if this helps but we add an Operation to shop orders to charge “Material Recovery” - posts a cost to the shop order and a recovery in consumables (I think!) in the accounts. Work Centre is set up to be 1p per hour so we book number of hours according - if we need to charge £5, we’d book 500 hours.
LInda
(I’m following this question to see what other creative solutions are available)
First of all, thank you for your valuable comment. What kind of process do you carry out in the "Material Recovery" operation? In our case, we put the manufactured product into a plastic bag and record its entry into the inventory. Labor and machine costs are allocated to operations. However, we want to reflect the cost of the non-stock plastic bag.
+13
Example Routing on a Shop Order below. Op 10 is to manufacture and is 10 hours, Op 20 is a deliver to stores 30 minutes, Op 30 is the Material Cost Recovery. Work Centre REC is set up to be £1 per hour therefore “booking” 5 hours charges £5 to the Shop Order. You can automatically close and report Op 30 at the point of completing the Shop Order (Backflush if you’re familiar?)
You would need to check with your Finance team on the setup of the Work Centre. You could achieve the recovery along the same principal using Labour Class instead and having the nominal rate on that.
LInda
+23
However, since it will not be issued to the shop order, that cost will never be booked on the shop order hence, creating a variance from the standard cost.
So I suggest this cost is rather handled as a material overhead.
Hi, I continue the path Björn is pointing at, but I suggest a general OH If it is more associated with the manufactured part itself. You can choose a fixed general oh per UNIT or per BATCH (i.e the order) Hope the different suggestions can help you.
Cheers,
Mats
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