Bill of Components |
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Bill of Components
Add all the required components and their quantities that make up the Bill of Materials (see quantity explanation below).
Bill of Components - Service Item (manufacturing overheads)
Manufacturing overheads, also known as factory overheads or production overheads, refer to the indirect costs involved in the production of goods.
If the item is a service (e.g., labour, electricity, depreciation, or other overheads), follow these steps to configure it correctly:
1.In the Item Lookup form, select the service item and open it.
2.Go to the Cost and Selling Prices tab.
3.Set Cost of Sales/Valuation Method to Supplier List.
4.Set Pricing Method to Last Purchase Cost.
Note:
•The cost price of a service item will only update the Supplier List Price and Last Purchase Cost.
•Service items do not affect stock valuation and will not generate any journal entries.
•No journal entries are created for service items because these costs are typically paid and recorded separately (e.g., electricity). Including them here avoids double-posting to the General Ledger.
•If a value is entered in the Cost Price Override, it will replace the Cost Price Ext value.
How to use the quantities on the components tab.
Example 1: Manufacturing a bike consisting of 2 wheels and 1 frame. |
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Qty = 1 |
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Qty Raw |
Shrinkage |
Final Qty |
The manufactured item will consists out of: |
To manufacture 5 bikes you will need: (the 5 is entered on the Process Production Run tab) |
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Item 1 (wheels) |
2 |
0 |
2 |
2/1 = 2 |
10 (5 x 2) |
Item 2 (frame) |
1 |
0 |
1 |
1/1 = 1 |
5 (5 x 1) |
Example 2 (Butchery) This feature is especially useful in a butchery setting. For example, if you purchase a whole sheep, you can use percentages to break it down into its various parts (e.g., legs, ribs, shoulders). Each part can then be assigned a proportion of the total cost based on these percentages. |
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Qty=100 (working in percentages know) |
Quantity to break up = 20 kg (e.g a lamb). This quantity is entered on the Process Production Run tab. The break up item will consists out of: |
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Qty Raw |
Shrinkage |
Final Qty |
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Meat |
50 |
5 |
47.5 |
47.5/100= 0.475 x 20 = 9.5 kg |
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Bones |
20 |
2 |
19.6 |
19.6/100= 0.196 x 20 =3.92 kg |
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Hide |
10 |
0 |
10 |
10/100 = 0.1*20= 2 |
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Rest |
20 |
0 |
20 |
20/100 = 0.2x20= 4.0 |
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Columns |
Description |
Shrinkage % |
Enter the percentage of shrinkage, and then either the raw quantity or the final quantity—the system will calculate the missing value automatically.. Examples: •If you enter a shrinkage of 10% and a raw quantity of 40, the final quantity will be 36. •If you enter a shrinkage of 10% and a final quantity of 40, the system will calculate a raw quantity of 44.
This means that due to shrinkage or wastage, you’ll need to start with 44 units in order to end up with 40 usable units.
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BOM |
This option is marked if the item is a pre-manufactured product.
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Recipe |
This option is marked if it is a recipe item. |
