Can we use project stock to capture the actual cost of purchases for sales order costing?
We have a requirement to compute the actual purchase costs of the raw materials (using vendor prices and not using the materials standard prices) used in the in house manufacturing of a sales order costing scenario.
For example :-
1) Sales order is raised for 100 units of product A
2) To manufacture the 100 product A, we need to buy raw materials of 20 units of A-1, 30 units of A-2
3) The purchase price of A-1 is $40 and A-2 is $10 from the same vendor.
4) Whereas the standard price maintained in the material master is $30 for A-1 and $7 for A-2
5) When we manufacture the product A in house for the sales order, we withdraw the A-1 and A-2 from inventory and the system uses the standard price of the materials to valuate the goods issue to the production order instead of the vendor purchase prices of the raw materials.
What we want is to valuate the raw materials using the purchase prices of the vendor and assign it to sales order cost estimate, instead of the standard prices maintained in the material master.
In order to achieve this, i think when we buy the raw material goods from the vendor, we need to assign it to a WBS project stock so that the valuation of the purchased raw materials will not be converted to standard costs by the standard prices in the material master. Thereafter when we issue the goods to production order, we need to issue it from the project stock so that the goods issue is valuated using the original vendor purchase prices instead of the standard price of the materials. The same thing should be done for goods receipt of the production order into WBS project stock so that the COGM is still valuated at the original purchase prices of the raw materials. Then finally we can transfer the stock from the WBS project to sales orders so that the sales order costs is valuated as per the original purchase prices of the raw materials.
Am i right to assume this?