Partner Zone

Purchase Order for Items Cost allocation

This thread is now closed to new comments.
Some of the links and information provided in this thread may no longer be available or relevant.
If you have a question please start a new post.
Tracy80
2 Posts
User

2Posts

1Kudos

0Solutions

Solved: Go to Solution

Purchase Order for Items Cost allocation

I am in the process of setting up Purchase Order templates.

I have set up an number of items that we purchase and then allocation and consume immediately on the job they are purchased for.

My issue is that I need to allocate items to variances Cost of Sales accounts depending on the job we are working on.  I notice on setting up an item though you need to allocate it to a nomimated expense account.

I need to be able to allocate it to the cost of sales account that the item was purchased for, eg I purchase electrical work equipment that I need to one day to allocate to expense account 1111-Cost of Sales - Job A and then the next day I may need to allocate that same cost to account 1112-Cost of Sales - Job B.

 

I notice on an item purchase order form you can not select the account.  Is there anyway to do this (ie so that I can override the item default expense account)?

If you can not override on the purchase order can I override it on the Bill (ie when PO converted to a Bill) or failing this on the payment.  Help please having issues seeing where I can amend the account.

Thanks

2 REPLIES 2
Jennifer_Kelly
Super Partner
492 Posts
Super Partner
Australia
Super Partner

492Posts

53Kudos

36Solutions

Accepted Solution Solved

Re: Purchase Order for Items Cost allocation

Hi @Tracy80 

 

Using Item Purchases you get the following Options:

  1. Tick I Buy only - this means you buy the Item and imediatley expense it to the nomimated expense account. Everytime you buy this item it will be expensed directly to the one GL expense account
  2. Tick I Buy, I Sell and I Inventory - this means when you buy an Item it will first be Debited to the Inventory (Asset) account, then when you Sell this Item the Average cost of the Item wil then be deducted from Invnetory and expensed to the nomimated cost of sales account that was setup on the Item card.

If you have separate Jobs or Projects that you are buying things for then you would do either of the above but then Allocate the Job Number that is associated with either the PUrchase of the Sale in the Job number field on the transaction, not have a separate GL account for each Job.

 

The idea is that you have one Cost of Sales account or Expense account in the General Ledger (e.g. 1111-Cost of Sale) that captures ALL purchases of that group of items but that total cost is able to be broken down further by the job number. Or more importantly you can run Job Profitability showing Sales and Costs on each Job using the Job reports.

 

See this link to Help to use Jobs in MYOB

 

I would definitley not recommend having a separate GL account for COS fore each Job number as per your example. 

  • expense account 1111-Cost of Sales - Job A
  • expense account 1112-Cost of Sales - Job B.

This would just create an enormous GL chart of accounts and you can't pull out the Sales for Job A and the Costs from Job A to see Job profiatility by just using GL P&L reports.

 

So really your only choice needs to be do I buy items into a pool as Inventory and then allocate them to a job when I use them or do I buy items in only for a specific Job and so can expeanse them directly to the Job when I purchase them. 

 

I hope that helps.

Jennifer Kelly CA
BI4Cloud- powered by Interactive Reporting
02 8011 1511
www.BI4Cloud.com
Tracy80
2 Posts
User

2Posts

1Kudos

0Solutions

Re: Purchase Order for Items Cost allocation

Thanks for the response Jennifer.   I had actually reached that same conclusion myself.  Just needing to convince the client to move to Job Costing rather than track through the GL as is currently occuring.

Great response.  Thanks again.

Didn't find your answer here?

Try using advanced search to find a post more easily Advanced Search
or
Get the conversation started and make a new post Start a Post