DBD: PO Fold Additional Costs Into Inventory

DBD: Purchase Orders - Fold Additional Costs Into Distributor Owned Inventory

You have the situation where you have entered multiple line items on an order that will be creating a finished inventory item. The situation is that you need to attach these additional costs to the item in your warehouse.

This can be accomplished when you go through the process of receiving the inventory item into the warehouse.

Before Receiving: Gather the Additional Costs

Prior to receiving the inventory, you will need to look at the order and make a note of the other cost which can include Artwork, embroidery, freight, and many other charges. Companies will at times enter the unit cost/total cost as a note to the warehouse in the order notepad.

You can enter all vendors under the same order number with a different PO code to designate the other vendors on the same job. You may also have a situation where there are different items in the same BAS order, but the special charges in this order may apply to multiple custom items on this order.

Receiving the Inventory Item

Typically, the inventory item will be received first.

If you wish the inventory item to carry the total cost of all parts of this order, you will need to keep a running total on this value. Then during PO Receiving for the Receiving this timeline, you can enter the total Quantity and the accumulated costs for all lines — this will carry over into the Lot setup screen. You will still process this Vendor invoice at the actual cost of this invoice.

Processing Vendor Invoices

When Accounting receives the vendor invoices, for the vendor that is invoicing the product, they will enter the correct value that appears on the invoice for only this line. All other lines for special charges will have the same value on both the receiving line and the vendor invoicing lines.

You will receive all costs when the invoice comes in. Each invoice, when processed, will post to the Inventory account in Accounts Payable unless the operator makes a change at this point.

Additional Notes

• Procedure to receive additional cost and apply to appropriate inventory item.
• Applies only to BAS orders where Automatic Job Costing is disabled.
• Job costing is not an option when a company wishes to have multiple custom items on the same BAS order.

Frequently Asked Questions

Q: What type of orders does this procedure apply to?

A: Orders entered through Sales Order Entry as Bill as Ship (BAS) orders, or Stock Purchase orders entered through Purchase Order Entry — specifically where Automatic Job Costing is disabled.

Q: What should I do before receiving the inventory?

A: Look at the order and note the other costs (artwork, embroidery, freight, etc.), and add notes to the order notepad alerting everyone managing the order that it needs special handling during receiving.

Q: How do I get the finished inventory item to carry the total cost of all the order's parts?

A: Keep a running total of the accumulated costs, then during PO Receiving enter the total quantity and accumulated costs for all lines — this carries over into the Lot setup screen. You still process each vendor invoice at its actual cost.

Q: How do multiple vendors on the same job get handled?

A: You can enter all vendors under the same order number using a different PO code to designate each vendor on the same job.

Q: What happens when the vendor invoices come in?

A: Accounting enters the correct invoiced value for the product line from that vendor. The other special-charge lines keep the same value on both the receiving line and the vendor invoicing lines. Each invoice posts to the Inventory account in Accounts Payable unless the operator changes that.

Q: Can I use this approach if a BAS order has multiple custom items?

A: Job costing isn't an option in that case — this procedure is for when Automatic Job Costing is disabled, which applies when a company wants multiple custom items on the same BAS order.

Tags: purchase-orders, po-receiving, distributor-owned-inventory, job-costing, bas-orders, DB-distributor