This is my first of what I’m sure will be many posts on this forum.
Scenario:
The company I work for creates experimental production jobs that are essentially R&D jobs that are meant to see if we can manufacture a new product. We are consuming direct labor and material, however we are not receiving the finished good into stock. Since nothing is received into stock, the $'s from these jobs flush to our manufacturing variance account when the job is closed.
Problem:
COS and manufacturing variance should not be impacted because this is not a saleable product.
Possible Solution:
We would like to recognize this as an expense that should be budgeted for. I’m thinking I should create a non-saleable product code that will direct the $'s from these jobs to our R&D expense GL account. Is this the right approach? Is there a more efficient way to handle these types of jobs?
That’s essentially what we do, we have a customer who is ZzOurCompany R&D we have a product group which is R&D. Sales orders are raised on the R&D customer for new trial products these lines are allocated the R&D product group that group has a GL control which directs the expense in the GL to R&D.
As our trial items are often shipped to real customers for testing this allows us to track using the Shipto on who got what when and follow up how they went. As the demand is linked to the R&D customer it’s easily spotted by the scheduler who if need be can push those jobs back to fulfil other urgent demands.
If you want, you could use project management and have these be project jobs. But it’s probably not any better than what you suggest and you would have to buy another module to do that.