Pricing and Costs - Stocked Items
You can register
Stocked Items against Projects in one of two ways: on the sales side through Sales Orders and Deliveries; or on the purchase side through Purchase Orders and Purchase Invoices.
On the sales side, Stocked Items will be charged to the Customer using the prices set in the Sales Order. Usually, you will have created the Sales Order from a Project Budget record that contains the prices agreed with the Customer. Otherwise, if you enter the record directly to the Sales Order register, pricing will be taken from the current Price List for the Customer or from the Item register. The unit cost for gross margin and other calculations will be the average unit FIFO value from the Delivery.
You can use the following methods to post Cost of Sales from Deliveries related to Projects:
- You can choose to have Cost of Sales posted as usual. If you have selected One Row Total or By Groups as the Invoice Stocked Items option in any Projects, you should choose to have Cost of Sales postings made from Deliveries. Invoices will not include Item Numbers if you choose either of these options, so it will not be possible to establish or post Cost of Sales values from Invoices. If you have selected By Items or By Transactions as the Invoice Stocked Items option, you can choose to have Cost of Sales postings made from Deliveries or from Invoices with Accruals from Deliveries. Do not choose to have Cost of Sales postings made from Invoices because this will cause Stocked Items in Project Invoices to be removed from stock twice. To specify when Cost of Sales postings will be made, use the Cost of Sales Posting options in the Cost Accounting setting in the Stock module. You will also need to select the Deliveries option in the Sub Systems setting.
- You can post Cost of Sales from Project Deliveries to a dedicated Project Materials Usage Account. This can be useful when carrying out long-term Projects (e.g. building or construction Projects) where the Invoices will not be detailed and will not individually list the Items and materials that were used. In this circumstance, it can be desirable to post the costs of the materials to an Account dedicated to materials used for Projects rather than a Cost of Sales Account.
The Project Materials Usage Account will be chosen as follows:
- It will be taken from the Item record.
- If you are using the Use Item Groups for Cost Accounts option in the Cost Accounting setting in the Stock module, it will be taken from the Item Group to which the Item belongs.
- It will be taken from the Account Usage Stock setting.
If you have not specified any Project Materials Usage Accounts, then Cost Accounts for Items removed from stock using Deliveries that are connected to Projects will be chosen in the same way as in other removals from stock (e.g. normal Deliveries and Invoices) i.e. they will be chosen as mentioned in point (1).
Note that the Project Materials Usage Account will not be used if you are posting Cost of Sales from Invoices with Accruals from Deliveries. It will only be used if you are posting Cost of Sales from Deliveries (or from Invoices, but using this option is not recommended as mentioned in point (1)).
On the purchase side, the price charged to the Customer will be calculated either by adding the Markup % of the Item to the Purchase Invoice or Expense amount or by adding the Markup % of the Item to its Base Price (depending on the Project Item Pricing options in the Project Item Handling setting). The cost can be the unit cost as calculated from the originating record, or it can be the Cost Price of the Item, taken from the 'Costs' card of the Item record. The choice is dependent on the Use Item Cost Price from Purch. Inv/Expenses option in the Project Settings setting.
To avoid the risk of registering Stocked Items against Projects twice (once from the purchase side and later from the sales side), the Project Item Handling setting requires you to make a choice as to whether you will use the sales side or the purchase side. You can include Stocked Items in Sales Orders that have been related to Projects, in Purchase Orders or both. If you choose the Both option, be aware of the risk of registering Stocked Items against a Project twice. If you choose to allow Stocked Items on Sales Orders only, you will still be able to include them on Purchase Invoices entered manually without related Purchase Orders, so in this case take care when registering Purchase Invoices against Projects.
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Terminology, Pricing and Costs in the Job Costing module:
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