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[Marty Dye]

?We want to include some low-dollar items on our BOM’s for standard cost and analysis purposes but these same items are difficult to issue discretely to an MO.  Here are the possible solutions under consideration:
1) Maintain 2 BOM versions – One for cost rollups and another for creating MO’s.  The version for creating MO’s would exclude the low-dollar items.  The items would be issued in bulk to manufacturing using a reason code that points to the correct COGS account.  I realize this will create an automatic variance for every MO.  We consider these items to be inventory until they are moved to the production area.
2) Backflush the low-dollar items.  We are a lot-controlled environment so backflushing is a challenge since any GP transaction will require a lot number.  Also we prefer to expense these materials when they are moved to the production area rather than track and count inventory.  Is it possible to backflush an indirect (non-inventory) part number so cost flows into the MO/WIP but no inventory must exist?
3) Drive the cost of these low-dollar items into standard cost using some other material or service category that won’t require transactions but assume the actual cost is at standard.

Would greatly appreciate your thoughts!

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Marty Dye
Sr. Cost Accountant
Prometheus Laboratories Inc.
San Diego CA
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[Rod O’Connor]

Hi Marty,

Assuming that you don’t want to actually track these items, you could consider creating an overhead as well.  For example, you could create a machine or labour code to reflect the cost of the low dollar items, and add that as a step in your routing.

I’m honestly not sure about backflushing non-inventory but ion theory it could work as well.  Definitely worth a try in your test environment.

Cheers,

Rod

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Rod O’Connor
President
Briware Solutions Inc.
Oakville ON
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[Marty Dye]

?Thanks Rod,
Although I don’t want to track these items as inventory once they are issued to production, I still need to track them while they are in a stocking location.  Also need to have visibility as a BOM item for planning and order purposes.

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Marty Dye
Sr. Cost Accountant
Prometheus Laboratories Inc.
San Diego CA
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[Al Schuette]

?It seems to me that unless you are looking to link the lot number of these components to the MO, you do not really gain capability by making those components lot tracked.  If you want to lot track I think you’ll need to component issue them to the MO; if that isn’t important, the backflush would seem to be a good route to go.

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Al Schuette
Senior Business Consultant
Heartland Business Systems, LLC
Little chute WI
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[Marty Dye]

?Thanks Al,
The materials do need to be lot tracked but not when they are issued to an MO.
I thought about adjusting out the lot-controlled part number and adjusting in a non-lot-controlled part number when the materials move into production but that seems messy.

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Marty Dye
Sr. Cost Accountant
Prometheus Laboratories Inc.
San Diego CA
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[Marty Dye]

?Does anyone have experience with WIlloware product: MFG PowerPack Item Valuation Update?
I’m wondering if this might solve the issue of including BOM components for costing but not have them show up on production BOM’s.

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Marty Dye
Sr. Cost Accountant
Prometheus Laboratories Inc.
San Diego CA
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