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| = INTRODUCTION TO MANUFACTUTING WITH SOLACE ACCOUNTING =
| | #REDIRECT [[Accounting#14. Manufacturing (Bills of Materials)]] |
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| A manufacturing business is any type that uses components, parts or raw materials to produce finished good. Manufacture in accounting deals with inventory valuation and cost of goods sold.
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| Inventory valuation
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| The inventory can be valuated with many ways. Solace accounting only provides 2 methods, Last-in-First-out called '''latest price''' and the averaging technique called''' average cost'''.
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| Cost of goods sold
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| The cost of goods sold also called cost of sales is the accumulated total used to manufacture a product or to produce a service which are being sold. In a service business setup, the cost of goods sold is generally the labor to render the service. In retails business, the cost of goods sold is likely to be the purchase price including other costs of acquiring the product.
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| These settings are found in the inventory settings section of the control panel and explained in “Module F trading in Stock”
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| = B.O.M SETTINGS =
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| Bill of Martials also called B.O.M and referenced in solace accounting as BOM is the structure or the list of raw materials, parts or components need to produce an end-product. Before defining these lists, all parameters bust be setup in solace account.
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| -Create BOM Entry Type Journal
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| Solace accounting uses a dedicated journal to record all BOM transactions, if not created yet proceed to create one.
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| From main screen, navigate to '''control panel'''
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| Double click on Entry Type setup,
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| Click '''add''' button
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| Type in the Journal Description
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| Click ok to save
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| Click Close.
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| -To Setup Manufacturing General Parameters
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| From main screen, navigate to '''control panel'''
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| Double click on inventory setup,
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| Click on Bill of Materials(BOM) menu button.
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| Select “Enable Manufacturing”. This will make all parameters changeable by the user and define the system to used manufacturing module.
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| Type in the Next BOM number
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| Select the Journal used for BOM transactions
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| Type in any additional cost
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| Select Account Number that will record the extract Cost.
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| Click Apply.
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| = CREATE BOM ITEM =
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| For illustration, we will manufacture simple bookshelf with 3 parts and maintenance labor as extra cost. First, we need to create the 3 parts inventory items.
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| {| class="wikitable"
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| |-
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| ! Code
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| ! Description
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| ! Last unit Cost
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| | 1BS_PART_A
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| | Bookshelf Part A
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| | 140.00
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| |-
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| | 1BS_PART_B
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| | Bookshelf Part B
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| | 150.00
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| |-
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| | 1BS_PART_C
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| | Bookshelf Part C
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| | 160.00
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| |}
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| We will now create the end-product and define the list a raw materials BOM
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| -To create list of raw materials (BOM)
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| While the inventory item is still selected in the list on the left
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| Click on BOM tab
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| Tick enabled
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| Type in the BOM code
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| Type in the description
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| Type in “1” in produce … with these components
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| Tick print details on invoice. This will list all components in the invoice
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| Enter all 3 parts and type in quantity needed
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| Click on Extra Cost and enter Amount for all listed costs
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| Click Save
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| {| class="wikitable"
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| |-
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| ! Note: Solace Accounting uses the same BOM module for combo items and kit items. The option use as kit will set the BOM to be generated on the fly in the invoice. A BOM item defined as Kit do not need to be manufactured as there as end-product is a simple assembly of components items.
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| |}
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| -To Manufacture and produce end-product
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| SETP 1: Record BOM Request
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| After defining the BOM and extra cost new the system is ready to create end-product by using the BOM and general parameters.
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| From main screen navigate to inventory
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| Double click on Manufacturing
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| Click on '''New Request'''
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| Fill in all details on the screen
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| Click Save
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| {| class="wikitable"
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| ! Internal
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| ! Tick this option is the request in an internal request that did not originate from a customer order. If unticked, the request will be linked to a customer account.
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| | Manufacture Number
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| | This is filled automatically by the system using the next BOM number as defined in setup
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| | Sub Account
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| | Customer sub account Number
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| | BOM Code
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| | Select the BOM Item code from the list
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| | Description
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| | Type in the request description
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| | Stock Code
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| | This is filled in automatically with end-product code
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| | Store
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| | Define the store in which the end-product will be generated
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| | Quantity Done
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| | Solace accounting allows manufacture on-demand. The requested quantity can be produced in stages. This box will display total quantity already produced
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| |}
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| -Material Requirement Report
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| You can at this point check your stock level by printing the request '''Material Requirement''' Report. Click on '''MR Report'''
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| SETP 2: Process BOM Requests
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| Select or highlight the request
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| Click on process
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| Enter processing quantity
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| Tick completed. If full requested quantity was reduced by the customer and the process need to complete with, tick this option for the system to complete the request regardless on of the total quantity produced
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| Click Ok
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| After clicking OK, the system will create end-product in the store, reduce the components quantities and post to the ledger all transactions generated by the process. The request will be off the list if the full request quantity has been produced
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| The end-product for finished good will be available in the inventry and can be sold as standard retail item.
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| Few reports are affected with the manufacture process and here are a samples
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| The BOM Journal report
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| The inventory Quantities Report
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| = CREATE COMBO/KIT ITEM =
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| Solace Accounting has the option to combine items into one process it as a whole item. This is particularly usefully also in case of break down when the item bought is sold component by component or into parts. To setup combo or kit, when creating BOM, tick the option "'''Use as Kit"'''. For our tutorial, let create a Dinner suite item which is a combo of a table and six chairs. First let create the chair inventory item that will be a component to the Kit. Combo is synonymous with kit and can be substituted.
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| {| class="wikitable"
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| ! Code
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| ! Description
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| ! Last unit Cost
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| | 1CH001
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| | Dinner Chair
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| | 75
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| |}
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| Then let create the Kit
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| {| class="wikitable"
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| ! Code
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| ! Description
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| ! Last unit Cost
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| | 1DS001
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| | Dinner Suite
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| | Will be calculated
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| |}
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| Add the 2 components and change the cost to accommodate the a discount if applicable to the combo/kit. Below, we adjusted the dinner table to 1 500. When selling this kit, Solace accounting will use the total of components as inclusif price of the kit sold.
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| = SELLING A COMBO/KIT =
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| The main difference between a BOM item and a kit item is that BOM item need to be manufactured before it can be sold and the kit item can be sold directly with no extra process. There are two ways of selecting a kit item in a document: by using the kit code with line type set to line type “1 stock item” or by setting the line type to “3 kit item” which will filter the inventory lookup list to show only kit items. Create an invoice, refer to “Module F Trading In Stock”, and select the kit item. The system will automatically add components in comments line as “'''Print Details on Invoice'''” was selected.
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| The system added 1 Dinner Table at 1 500 and 6 Dinner Tables at 75 each
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| 1x1500 + 6x75 = 1 950 (inclusive total)
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| Posting this invoice will result in all accounts changes, as per standard invoice but with the kit item, Solace accounting will also reduce each component quantity.
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| All sales analysis reports are affected here is a sample
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| On the report, the Dinner chair and Dinner table quantities are reduced proportionally to the sale.
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| = WERE FROM HERE =
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| Manufacturing is presented in this tutorial as a complement to the inventory module, to gain full understanding of bills of materials, combo and kits we recommend studying all the modules related to inventory.
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