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BOM includes Raw Material and Services


#1

We are Apparels manufacturing co. Already bought the ERPNEXT version however we are facing problem in making BOM. As our factory has raw material (tangible items e.i fabric, thread, button etc and also services like cutting, stitching, packing etc. problem here is we are paying them Per Piece Rate and Salaried person.
How should we bring these services cost into bom and end of the month we calculate the cost paying as per piece of finish goods. ? Thank You

Anjum W.


#2

Have a look at this , and see if it helps: https://erpnext.com/docs/user/videos/learn/manufacturing-make-to-order.html

See if that helps with getting production costs into BOM.

I’m not sure I understand what the end of month needs are.


#3

We can add the Raw Material which is in most cases in our store as stock items, however how we can add the services cost like stitching, cutting, packing, which we pay after fortnight evaluating their total work. Should we have to make advance entry to buy their services same as raw material ?
if this is the case, then i to keep that services cost as negative so we can make one entry end of month or fortnight to pay those bills and record as in stock.
is that the way to handle such operation,? or is there any other option for it? Thank you


#4

Again, see the video. Note that you can add the services to the BOM by clicking the Operation check box. You can then Edit the workstation costs and click Update Costs at top right when those costs are known.


#5

All the operation has Per hour cost, how i can add cost that are being paid as Per item finished to worker.
I have seen this video so many times, and even all manufacturing videos available on the user help portal.
I have even watched Umair Video where he was demonstrating to someone in Dubai for exhibition hall setup, he only touches the raw material cost section, not try to add any services cost based salary or per operation.
is there any way to call Skype and someone demonstrate on real situation task example?
Thank you


#6

Is it possible for you to convert cost per item to cost per hour? In some cases it is possible if we know how much time the worker took to make that item. But I understand it could be tedious


#7

It’s very time consuming effort, like for one shirt stitching we are paying 50.00 and they are working order based not hour based.
What would be the other solution. ?
Is it possible to add their cost as Raw Material but in services head. but it can be fetched in transfer as negative value to the WIP, rather making their purchases entries with each order, we can make one entry at the end of month.
This is what I’m thinking, you guys must has some real solution, as this is not something off the way process of paying COGS.
Thank you


#8

Currently, there is no direct way to achieve what you are looking for. You can either do as @smino suggested and convert the cost/material to cost/hour, or treat the labor cost as indirect cost.

I believe you are entering the realm of Activity Based Costing, it is not currently available in ERPNext. I think SAP has it, but I’m not sure.

I’m not an expert in this area, I have little bit of knowledge from my MBA days. Unfortunately I have not encountered a company that does Activity Based Costing so far in my work.

If you are willing, we can discuss this over a call to see if I can help.