Questions and Answers

Q: The article explains how finished good costs are posted to Inventory Control (IC) and General Ledger (GL) in Sage Pro ERP.

A: Based on the costing system defined in IC, the program calculates the sum of components used multiplied by the real-time cost of each component at the time of the manufacturing transaction. Refer to the list below for more information:

• Manufacturing Journal Posting
  Production Entry (PE) and Work Orders (WO) post their inventory issues (transaction type = “EI” for Engineering Issue) and inventory receipts (transaction type = “ER” for Engineering Receipt) through the IC module. The ICTRAN table captures the actual finished good cost based on the sum of the component costs in effect at the time of the manufacturing transaction.
• On-Hand Inventory Posting
  While the actual costs are stored in ICTRAN, in some cases Sage Pro will adjust the unit cost of the finished good.
  • Weighted Average
    The unit cost of the finished good will be different than the actual cost if there is on-hand inventory and the unit cost for those items is different than the unit cost of the finished good just manufactured.
  • Standard
    Once the unit cost of the finished good is defined, it is not changed by new finished good postings. Any difference between the actual cost of the finished good and the existing standard cost of the finished good will not be seen in the on-hand inventory posting. It is posted as a variance within the GL posting. In Sage Pro 7.3, the Mfg Cost Variance account. It is used to post the difference between the standard assigned cost of a finished good and the actual manufacturing cost. This field is only active for companies using Standard cost.
  • LIFO and FIFO
    Each new receipt of a finished good creates a new cost tier; however, the unit cost of the on-hand inventory is updated using the weighted average cost.
• General Ledger Posting
  The complexity of the posting to the GL depends on whether or not component scrap quantities are specified:
  • Without Scrap Quantities
    Without scrap quantities defined at the component level, a credit is created for the Item Control account of each component and an offsetting debit is created for the Item Control account of the finished good. In a Standard cost environment, any cost variance for the finished good is posted to the IC Clearing account of the finished good.
  • With Scrap Quantities
    With scrap quantities defined at the component level, a credit is created for the Item Control account of each component based on the standard component quantity and a debit is created for the IC Clearing account of each component based on the scrap component quantity. An offsetting debit is created for the Item Control account of the finished good, less any value already posted for scrap. In a Standard cost environment, any cost variance for the finished good is posted to the IC Clearing account of the finished good. In Sage Pro 7.3, a scrap account was added to post manufacturing entries generated for quantities of components that are usually broken, lost or wasted.

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