Inventory cost advice

We have scenario whereby we receive finished goods into inventory in real time as we continue to manufacture the product on a specific job. The raw material is coil based so when the finished product is received into inventory the material weight/cost has not been applied to the job (we do this at the end) thus it is not allocated to the inventory cost.

It is also possible that the material could be shipped to the customer before the job is completed, thus understating the COGS. We do not post to GL so in the end we can make adjustments on these transactions to make them whole but it adds a lot of non value added activity. Does anyone have any suggestions or practices that work or minimize this problem. Most of our other inventory type parts (we are mixed mode) have their jobs completed 100% prior to being placed into inventory so this is a unique situation.

I do have a support call in on this, case CS0000231505.



Hi Keith,

If you manufacturing costs are fairly stable, this might be a good candidate for Standard Costing. This allows your COGS to move at the standard and then you can let the labor go in later. Standard costing takes all of the timing out of the process and forces you to recognize your variances later. This can be turned on by plant/part.

Back-flushing your material could help with getting the coiled materials issued as you complete parts.

Mark W.

Hi Keith,

What we’ve done in this scenario is to issue what SHOULD be used on the job when production begins then we true it up at the end. Another idea would be to backflush this raw material assuming your labor transactions are pretty tight.