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Disassembly: cost and accounting

How the finished good's cost is shared over the components, and the journal.

Steps

  1. The finished goods leave at their stock cost (weighted average, FIFO layers or standard - whatever your costing method gives).
  2. That cost is shared over the BOM's components by cost share: each component's BOM quantity ร— its current cost (by quantity when no component has a cost). E.g. a bicycle at 12,000 with a frame 6,000, two wheels 1,500 each and a seat 1,000 โ†’ 60%, 30%, 10%.
  3. Full: the components take the whole cost - frame 7,200, wheels 3,600, seat 1,200. Partial: each recovered component takes its share ร— the part recovered; what is not recovered is written off to stock adjustments (e.g. frame and one wheel: 7,200 + 1,800 recovered, 3,000 written off).
  4. One journal: Dr each component's inventory account ยท Dr stock adjustments (not recovered) / Cr the finished good's inventory account. Standard costing: components come in at standard, the difference to production variances.
  5. Weighted average: each component's average is updated by what came in; FIFO: a new cost layer.
  6. Components put into a warehouse of another branch are booked to that branch's inventory; the finished good's credit stays with its own branch.

Good to know

  • The disassembly page shows the cost, each component's share and value, the stock movements, the journal and the audit trail.