Background:
Client has bill of material with two operations. Their process is to issue all materials upon release of the production order. They backflush labor however at this time no labor is being capitalized due to $0 cost in the work centers. Client uses the FIFO valuation method.
Issue:
Upon release of a production order and related material, client creates a move transaction for some of the planned items. For example, if the Production order is for 450 items, the first move transaction may be for 100 items. When they create the move transaction, the material costs to produce 450 items gets allocated to the 100 items in the first move. When the remainder of the items are completed, they are put into inventory at $0.
Why doesn’t the system allocate the appropriate cost to the items as they are completed so that each item is costed the same?
Best answer by Debbie Baldwin
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