To ensure that a business is profitable, the business must be able to effectively measure and control its costs. To evaluate the available inventory and cost of goods sold, many businesses use the weighted average cost (WAC) method as a reliable measuring of costs and for inventory valuation. Proper valuation of costs is the base for proper determination of profit or loss.
In FirstBIT ERP, the cost of inventory including finished goods and work-in -progress, costs of goods sold, costs of services are calculated automatically by the Month-End Closing service tool.
The options available for cost calculation on the Accounting > Service Tools > Month-End Closing form define the stages of cost calculation:
- Calculate Direct Costs: This option enables calculation of weighted average costs of the ending inventory and cost of goods sold.
- Allocate costs: This option is used if your company enabled the Production module to account for production of the goods. The option enables allocation of the overheads to finished goods and work in process for Cost Allocation Methods with Cost of Goods / Services selected as allocation type. Also can be used if your company defined custom allocations to allocate some specific costs to the inventory.
- Calculate Actual Costs: If selected, this option enables calculation of actual costs of finished goods and work in progress. Also, it enables updating of costs of inventories, sold goods, and services based on the average costs and the allocated costs.
If needed, you can manually allocate specific costs by creating Manual Cost Allocations. You must perform manual cost allocations before you run the period closing process. The accounts involved in manual allocations, will not be processes by the automatic allocations
Cost estimations during the period
If you need to estimate costs during the current month, you can select the Calculate Costs in Credit Notes, or Show Costs in Sales Documents, or both options on the Administration > Settings > Sales form. Then, for particular items listed in a document (Credit Note, Invoice) the average weighted costs will be calculated based on the data available on the date of the document, that is, beginning costs and purchases of this item incurred before the transaction date.
Direct Cost Calculation
The period closing process performs calculation of direct costs if the Calculate Direct Costs option is selected on the Month-End Closing form. The process includes calculation of the average costs for inventory for sale and cost calculation for finished goods produced during this financial period.
Inventory for sale
When ordering goods and materials from different suppliers, the company receives the same items with different costs. Sometimes, items are packed differently and measured in different UOMs.
The weighted average cost method assigns the same unit cost to items from different supplies, with larger or smaller quantities, with higher or lower prices, and originally measured in different UOMs.
The cost calculation is performed for the base UOM of the item with specific characteristic or included in a specific batch, recorded to a specific GL account, stored in a specific warehouse, owned by specific entity. Using this method, to find the average cost divide the sum of all costs (including the additional expenses) by the quantity of base units available for sale. It is also a method for valuing inventory.
Items with serial numbers have unique costs - purchase price and in some cases with additional expenses allocated in the basis invoice.
Finished Goods
Generally, direct costs of finished goods are recorded by using the following documents:
- Production Orders
- Productions
- Goods Receipt Note
- Inventory Transfers
- Bills of Materials
Depending on production processes established in your company, only some of these documents can be involved.
Allocate Costs
Default cost allocations are intended for ditributing the indirect costs and overheads such as administrative costs over finished goods.
Allocation Settings define the rules for such allocations: the source accounts where to get the source amount and which methods to apply for allocating,
A set of predefined methods can be used.
Other allocation methods can be implemented separately by using the Allocation Methods form.
For more details on allocations refer to Overview of Allocations.
Calculate Actual Costs
Actual costs refer to the costs that are actually incurred, they comprise the direct costs and the the allocated costs.
В зависимости от типа бизнеса затраты могут консолидироваться по проекту, заказу, конкретной продукции или комбинации этих разрезов.
Системные настройки: даем возможность указать дополнительные аналитики производственного учета (Готовая продукция, Проект, Заказ покупателя).
Добавляем новый технический справочник аналитика производственного учета.
Регистр Inventory добавляем измерение: аналитика производственного учета; реквизит: аналитика производственного учета корр.
Состав данных, проведение документа InventoryTrasfer (при отнесении материалов в WIP).
Состав данных, проведение документа InventoryReceipt.
Состав данных, проведение документа ManualCostAllocation.
Состав данных, порядок заполнения, проведения документа Costing.
Закрытие месяца функция Calculate Direct Costs.
Функционал «Распределение затрат» предназначен :
Все списания идут на отдельный счет
For each sales or transfer transaction, the costs of goods sold are calculated based on the beginning costs and purchases of this item incurred before the transaction date..
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The following data sources for allocations are available:
- Direct costs measure - quantity for used for WIP
- номенклатурные затраты — используются для отражения прямых расходов производственной деятельности с количественным измерением;
- Expense items — direct and indirect costs collected and distributed as amounts
- используются для учета прямых и косвенных расходов, которые учитываются и распределяются только в суммовом выражении;
- формирование активов и пассивов — отражение операций, связанных с формированием активов или регистрацией обязательств, управление которыми ведется, как правило, в ручном режиме или сам факт регистрации которых обусловлен требованиями по ведению учета.
- Раздельный учет результатов финансово-хозяйственной деятельности в организациях-исполнителях ГОЗ.
Распределение номенклатурных затрат
Все номенклатурные затраты характеризуются в учете как прямые производственные расходы и учитываются в подразделениях в составе незавершенного производства.
Distiributed by quantity. Can be distributed to expense items to batches by using the selected allocation method.