Overview of production posting of finished goods.

Once you have set up a bill of materials for each of the finished goods that your company produces, you can then post production of the finished goods using one of two methods:

• Manual Production Posting – Use IN Production Entry to manually post the production of a finished good. You specify the inventory location, the finished good material, and the quantity produced, and the system automatically relieves the raw materials from that location and updates the quantity on hand of the finished good for the same location.

  Note: You may post the production of several finished goods in a single batch, but all raw materials used in the production of the finished goods must be at the same location.

• Automatic Production Posting – This method is only used in the Material Sales module when the Auto Production box on the Info tab of the IN Location Materials form is checked. When this box is checked the system will automatically relieve the appropriate raw materials from inventory (using the bill of materials) when the finished good is sold from Material Sales. Auto production works the same as manual production; it just eliminates having to post production manually. As with manual production posting, the system automatically relieves the raw materials directly from inventory and adds the finished good to inventory. But, because the production is posted at the same time the sale is posted, it also immediately relieves the inventory of the finished good.

  Note: Although auto production can be used for any finished good, it is typically most useful for finished goods such as asphalt or concrete. Because you cannot store these types of finished goods, auto production allows you to implement production posting when the finished good is sold.

With production posting, the general ledger implications are a bit more complicated. Because there are typically multiple raw materials used to produce a finished good, the system must make a GL entry to the Inventory account for each raw material used. GL entries are summarized by account. Inventory accounts are set up by location and can be overridden by material category (IN Location Category Override). Regardless of how you set up your accounts, only one entry is made for each account affected when posting a production batch.

Note that the GL entry amounts for Cost of Production and Inventory (Raw Materials) are different than the GL entry amounts for Inventory (Finished Good) and Value of Production. This is because the cost of the finished good (as maintained in IN Location Materials) is used, not the total cost of the raw materials. You control this cost and can set it to include other costs of production.