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Cost of product

Former Member
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I have a product A. Production order is added with qty 30 and entire raw material is issued against it. The cost of raw material is Rs.35,223. While issuing material , an assembly B which is part of product A is not issued. Now receipt from production is added for A i.e. 3 qty. The unit price is Rs. 18,133. So the cost of material should be Rs.54399 i.e. 18133 * 3.

I have issued material whose cost is Rs.35223 and while crediting the cost increased to Rs.54399. How has the cost increased ?

After issuing the material , I may have runned the inventory audit report. I can not recall whether I have runned the inventory audit report.

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Answers (1)

Answers (1)

frank_wang6
Active Contributor
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What's your costing method? And your question is still a little vague. Could you make your question more clear by providing a fake BOM to simulate your situation?

And if you just worry about the Final Product A's cost is wrong, then just use inventory revaluation to modify it. The accounting effect is general in correct.

Frank

Former Member
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The costing method is FIFO. This is only the half part of the complication. These transactions have occurred in Jan 2015 and further new complications are also created in the next half.  I want to give explanation about this cost variation to the accounts department. 

frank_wang6
Active Contributor
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ok, if possible, could you write down those credit and debit pair on each of the transaction you have made.

In your case, it should include Production order issue material, complete.

And let us know what it supposed to be like. We can definitely  find you an explanation. By the way, your accounting people should know this once you show them all those G/L transactions.

Frank

Former Member
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Please view the attachment. All the material is issued except 107306009. On 31/01/2015 material is issued with the following cost. On 06/02/2015, receipt from production is added.

Former Member
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Hi,

Better if you create disassembly production order for your finish product and take all raw material back in stock except the one you have not issued.

After create fresh production order and issue all item and receive finish good and your costing will be accurate.

Regards,

Chintan

Former Member
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The finished product is already sold to customer in Jan 15. At this stage , I can not rollback. I want to find the reason for deviation in cost.

Former Member
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Hi,

Check below note for better understanding

2097282 - Incorrect parent item cost on receipt from production

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