Manage your production cost
Accounting is an essential part of the Manufacturing industry. Having the ability to track the actual cost of a production job is crucial in making decisions that will make your business profitable.
Stock&Buy automatically keeps track of your product cost using the moving average valuation method. When you mark a production order as completed, the system will automatically update both the finished good and the component parts moving average cost values.
Assembly orders
When you complete an assembly production order, the system will automatically compute the finished product cost from its parts as defined in the product BOM. Extra overhead costs are also included in the final cost calculations.
As an example, let consider a screen BOM comprised of the following components and their costs:
| Component name | Quantity | Unit Cost |
| A circuit | 1 | $100 |
| A screen | 1 | $20 |
| Power supply buttons | 3 | $3 |
| Overhead cost | 1 | $50 |
When a single screen unit is built, the system will set its moving average cost to $100 + $20 + (3 x $3) + $50 = $179
The example above has been simplified to keep things simple. In a real-life situation, the order quantity usually equals the BOM quantity + wastage – unconsumed units.
Disassembly orders
When you complete a disassembly production order, the system will automatically compute the component parts’ cost from the finished product being disassembled. The system will evenly distribute any extra overhead costs on the BOM parts by value, so the more expensive items receive a larger portion of the extra cost
Let’s take the previous example of the screen that has a moving average cost of $179 which we would like to disassemble into its parts:
| Component name | Quantity | Unit Cost |
| A circuit | 1 | $100 |
| A screen | 1 | $20 |
| Power supply buttons | 3 | $3 |
| Overhead cost | 1 | $50 |
When you disassemble the screen, a total cost of $179 + $50 will be split between the line items. The most expensive item will receive the largest portion of the cost.
The example above has been simplified to keep things simple. In a real-life situation, the order quantity usually equals the BOM quantity + wastage units.