> On Thu, Mar 15, 2012 at 2:59 AM, robert <
be...@gmail.com> wrote:
> > Hi,
>
> > Repacked 15 kg of dried meat in 57 bags of 250 gram.
>
> > Bom: scrap 5% of 15kg is 750 gr is 3 bags. Thus 60-3=57 bags produced.
> > And 14.25 kg needed.
>
> > Standard rate is 8.98 /kg
>
> First of all, In BOM to produce 1 bag of FG (small bags) require 15/57=
> 0.263kg (not .25 kg as you mentioned in BOM) raw material (dried meat).
> Scrap should also be considered as required raw material.
>
> For explanation, I am considering 0.25 kg RM (Raw Material) / 1 bag FG. So
> in this case, basically we are ignoring scrap.
>
> Hence, Production cost of 1 bag of FG = 8.98/.25 = 2.245 (you did not
> mention any operational cost)
>
>
>
> > In the backflush
>
> > QTY:14.25
> > Incoming rate:9.52
> > Total: 135.66
>
> > The purchase price was 15*8.98=134.70 the unit price for production
> > should be : 134.70/14.25= 9.45 and not 9.52.
> > Of course, the total sld be the same as the purchase price (135.66)
>
> You have made a production order to produce 57 bags of FG item.
>
> In backflush, incoming rate of RM is 9.52 as per valuation rate - FIFO (it
> will not consider standard rate 8.98).
> And qty = 14.25 kg (not 15 kg as we ignored scrap while making BOM)
> So, amount of consumed RM = 9.52 *14.25 = 135.66
>
> Here we can not consider standard rate, because it will calculate wrong
> valuation rate.
>
> > Than the second line of backflush:
>
> > QTY=57.00
> > Incoming Rate: 2.25
> > Amount: 127.97
>
> > Cannot identify the origin of 2.25 (as standard rate is 2.10) , looks
> > like it is standard plus tax (6%)= 2.226 (??).
>
> Incoming rate 2.25 (actually 2.245) of FG comes from BOM which is
> production cost of that item.
>
>
>
> > Than the total amount is the sum of the two amounts (263.63) , which I
> > believe is meaningless and misleading.
>
> Yes, Total amount here does not convey anything. We will hide that field in
> case of backflush.
>
>
>
> > Further, in order to calculate the profitability of sales, one wld
> > expect that the item production price, in this case 9.52 ( my math) is
> > somewhere recorded, in order to allow calculation of profits.
>
> To calculate profitability of sales, item production price are maintained
> in the system which is in this case 2.245 / 1 bag (not 9.52)
>
>
>
> > A logical thing would be that this would be the standard rate, or that
> > the would be an extra field in produced items, namely production
> > costs.
>
> > Please explain logic and mathematics.
>
> > Thanks and rgds roebert
>
> If you found anything wrong or have any doubt in the above explanation,
> please reply.
>
> --
> Regards,
> Nabin Hait
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