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Magneto's avatar
3 years ago

Auto-build accounting for raw materials and injection moulding

Hi, 

We use auto-build to assemble components (which are in inventory, but not for sale) into the finished product (which is also in inventory as the items for sale). 

But there's a step before this, where we purchase the raw material (the plastic) that gets melted and injection moulded into the components that make up the finished product. 

I'm wondering what's the best way to account for the raw materials that go into making the components, which then are built into the finished product? This is both account for it and try to track it for stock levels. It's raw material, that eventually builds into inventory, but in addition there is the injection moulding costs per component as well. 

IS it accounted for as an Expense or Cost Of Sales? 

Thank you, 

James  

 

1 Reply

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  • Mike_James's avatar
    Mike_James
    Ultimate Cover User
    3 years ago

    Hi Magneto ,

     

    Hi  , you can use autobuild for this situation. The first thing is that all components and sold items must be inventoried.

     I suggest you set up a trial in a Clearwater file to see if it all works. 

    You will need the following items. In this list B, I and S mean Buy, Sell and Inventory:

    Plastic, (B-I) probably inventoried in kilos, although you may purchase in tonnes.  (If so, set the number of inventory units per buying unit carefully, and record a purchase in tonnes, which will convert to kilos. Personally I avoid doing this if I can, because users forget to purchase in tonnes). 

    Injection moulding, (B-I). For this, you would set the cost as $1, to allow any value of injection moulding to be set against a particular componenent and create a dummy inventory every month by inventory adjustment. After recording all your production of moulded components for the month, you would return unused dummy inventory to the P&L with another opposite IJ.

    Moulded component (I), this component would have 2 entries in the autobuild, one for the plastic and one for the injection moulding.

    Sold item (I-S), this item would have several autobuild entries, including the moulded component and other components. 

     

    Moulded components and sold items can both be added to stock using the build process. When the sold item is invoices, stock of that item will be reduced, and cost of sales will be increased.

     

    I've probably left out some notes, feel free to post your questions.