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Using stock valuation accounts to tracks cost of raw material for manufacturing

Keenmeng Lew
on 5/21/16, 7:22 AM 742 views


I am trying to understand how inventory movements between warehouse locations can be used to to generate stock valuation account entries and track cost of raw material used for manufacturing.  Any thoughts welcomed.

Manufacturing orders are not used because it is not practical from an operational view. The quantities required for the manufacture of finished goods are very small. The idea is to move raw material to the shopfloor for manufacturing from stock. Finished goods are categorised as consumables and their inventory not tracked. The proposed concept is for the quantity of stock on the shopfloor to be set to zero and the value of the stock to be expense once it moves to the shopfloor location.  The value for finished goods sold is recorded in an income account. The profit would be income derived from finished goods sold minus the expenses recorded from moving the stock to the shopfloor.

Is this something which makes sense?



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Asked: 5/21/16, 7:22 AM
Seen: 742 times
Last updated: 5/21/16, 10:29 AM