Now I will extend the same exercise by some other setup options
Background/Setups:
The setup option considered for the accounting transactions example consists the followings
1. Machine & Labor Marked Auto Back flush
2. Inventory Items using “Periodic Valuation Method” ( FIFO OR LIFO )
- Standard costing ( Periodic Valuation) values inventory at a cost based on the standard cost assigned to an item, plus eight other factors:
- Inventory – Material Fixed Over Head ( FOH )
- Inventory – Material Variable Over Head ( VOH )
- Labor Cost
- Labor Fixed Over Head ( FOH )
- Labor Variable Over Head ( VOH )
- Machine Cost
- Machine Fixed Over Head (FOH )
- Machine Variable Over Head( VOH )
Summary:There are three Main Transactions from manufacturing
1. Component Transaction Entry ( Issuance Of Material )
2. MO Receipts ( WIP )
3. MO Receipts ( FG )
And One Additional Transaction4. MO Closing ( In Case Of Variance )
Details:Here is the details about the above transaction types with respect to a standard process of MO
Step 1: Bill Of Material Setup
a. No Accounting Transaction
Step 2: Manufacturing Order Creation
b. No accounting transaction
Step 3: Component Transaction Entry ( Issuance Of Material )
a) Issuance Entry
Account | Debit | Credit |
Inventory | -- | |
Inventory- Material FOH | -- | |
Inventory- Material VOH | -- | |
WIP- Material | -- | |
WIP- Material - FOH | -- | |
WIP- Material - VOH | -- |
b) Reverse Issuance
Account | Debit | Credit |
Inventory | -- | |
Inventory- Material FOH | -- | |
Inventory- Material VOH | -- | |
WIP- Material | -- | |
WIP- Material - FOH | -- | |
WIP- Material - VOH | -- |
Step 3: MO Receipt
a) WIP For Machine & Labor
Account | Debit | Credit |
WIP-Labor | -- | |
WIP-Labor-FOH | -- | |
WIP-Labor-VOH | -- | |
Applied-Labor | -- | |
Applied-Labor-FOH | -- | |
Applied-Labor-VOH | -- | |
WIP-Machine | -- | |
WIP-Machine-FOH | -- | |
WIP-Machine-VOH | -- | |
Applied-Machine | -- | |
Applied-Machine - FOH | -- | |
Applied-Machine - VOH | -- |
b) FG Entry
Account | Debit | Credit |
WIP-Labor | -- | |
WIP-Labor-FOH | -- | |
WIP-Labor-VOH | -- | |
Inventory-Labor | -- | |
Inventory-Labor-FOH | -- | |
Inventory-Labor-VOH | -- | |
WIP-Machine | -- | |
WIP-Machine-FOH | -- | |
WIP-Machine-VOH | -- | |
Inventory-Machine | -- | |
Inventory-Machine-FOH | -- | |
Inventory-Machine-VOH | -- | |
WIP – Material | -- | |
WIP – Material FOH | -- | |
WIP – Material VOH | -- | |
FG-Inventory | -- | |
FG-Inventory FOH | -- | |
FG-Inventory VOH | -- |
Step 4: MO Close ( In Case Of Variance & its depend the type of variance as well)
Account | Debit | Credit |
WIP-Labor | -- | |
WIP-Labor-FOH | -- | |
WIP-Labor-VOH | -- | |
Variance -Labor | -- | |
Variance -Labor-FOH | -- | |
Variance -Labor-VOH | -- | |
WIP-Machine | -- | |
WIP-Machine-FOH | -- | |
WIP-Machine-VOH | -- | |
Variance -Machine | -- | |
Variance -Machine-FOH | -- | |
Variance -Machine-VOH | -- | |
WIP – Material | -- | |
WIP – Material FOH | -- | |
WIP – Material VOH | -- | |
Variance – Material | -- | |
Variance – Material FOH | -- | |
Variance – Material VOH | -- |
Inventory Cost & Sales For Periodic Valued Items:
For Periodic Valued items, system maintain inventory cost in nine main buckets
- Inventory – FG
- Inventory – FG FOH
- Inventory – FG VOH
- Inventory – Labor
- Inventory – Labor FOH
- Inventory – Labor VOH
- Inventory – Machine
- Inventory – Machine FOH
- Inventory – Machine VOH
-
So when you prepare sales for Periodic valuation method finished goods, system will record the sales (COGS) in the following detailed manner
Account | Debit | Credit |
Sales | -- | |
Accounts Receivables | -- | |
Inventory | -- | |
Inventory – FOH | -- | |
Inventory - VOH | -- | |
Inventory Labor | -- | |
Inventory – Labor- FOH | -- | |
Inventory – Labor- VOH | -- | |
Inventory Machine | -- | |
Inventory – Machine- FOH | -- | |
Inventory – Machine- VOH | -- | |
COGS-Material | -- | |
COGS-Material – FOH | -- | |
COGS-Material – VOH | -- | |
COGS-Labor | -- | |
COGS-Labor – FOH | -- | |
COGS-Labor – VOH | -- | |
COGS-Machine | -- | |
COGS-Machine – FOH | -- | |
COGS-Machine – VOH | -- |
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