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Jfwong

Costs in Subcontract Finished Goods, not take in costs of raw material usage ( FIFO method)

SOLVED
Posted By

Hi, just a post to everyone for your ideas .Currently am doing a Subcontract Finished Goods.

Process is : Issue PO to Subcontractor with FG and service item line-->Deliver Raw mat to subcontractor--> Received stock based on PO with FG and service Cost.

Costing method is FIFO. Material usage is Raw Material 1 and Raw Material 2 which is also costing method. FIFO. In the Subcontract order, there is the service cost line. When I received back the FG from subcontractor, and check the item cost, it only contains the cost of the service item, without any value of the Raw Material 1 & 2 which I expected.Is it possible for any setup/configuration whereas the Finished Goods received back from Subcontractor to reflect all material and service costs?  (Raw Mat 1 + 2 + Service cost. ).

Thanks Plenty

Rgards

Daniel

  • 0

    Daniel,

    Make sure the materials tab in the Subcontract BOM has the Valuation column set to "Yes".

    Regards,

    Frank Bernal

    Southeast Computer Solutions

  • +1 in reply to FrankBernal
    verified answer

    Thanks Frank. That could be one of the possible causes. But in my case, I was ignorant of the WIP posting requirement, and therefore that was the root cause.

  • 0 in reply to FrankBernal

    Hi Frank

    After running the WIP Posting, the cost of the raw materials are transferred to WIP. How do I absorb the cost into the Finished Good? Is the finished good required to be set to Standard Cost? 

    Currently with the Finished Good set to FIFO:

    After completing the subcontract order and WIP posting, I observe the double entries:

    Debit Inventory [Value from Subcon service]

    Credit WIP [Value from Subcon service]

    Debit Clearing

    Credit Clearing

    Debit WIP [Value from Raw Material]

    Credit Inventory [Value from Raw Material]

    Regards

    Daniel

  • +1 in reply to Jfwong
    verified answer

    The answer depends on whether you are using a work order or not.  If you are using a work order, then you need to close and cost the work order.  If you are not using a work order, then you need to close and cost the sub-contract order.

    Here are the steps for sub-contract without a work order:

    Sub-contract process

    1. Purchasing > Subcontract > Sub contract orders
      1. Create Sub-contract order
        1. Released product tab: Enter PUR quantity
        2. Service tab: Enter/check Gross price
          1. Note: Gross price can come from a price list or defaulted from Product set-up
      2. Create Purchase order
      3. Check allocations
        1. Shortages is expected if you are providing material to the supplier
        2. You can default the transaction to automatically allocate
    2. Sales > Deliveries > Deliveries
      1. Create delivery
      2. Validate delivery
    3. Purchasing > Receipts > Receipts
    4. Purchasing > Subcontract > Mass closing > Completions
      1. Close
    5. Costing > Sub-contracting cost > Calculate actual sb-cont cost
    6. Run FUNWIPACC

    Regards,

    Frank Bernal

    Southeast Computer Solutions

  • 0 in reply to FrankBernal

    Thanks Frank ! Am able to obtain the desired result, as per your guidance.

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