[SOLVED] Operation costs being accounted for twice. Please advise

ERPNext Manufacturing
1

Hello,

I’m very confused about how to configure the accounts for manufactoring. I’ll try to explain:

I make paper lamps. To make paper lamp L1 I need a sheet of paper P1 and a 60 minutes operation O1. So I created a BOM for A1:

P1 = 1€
O1 = 10€/h

To make the paper lamp A1 the cost is 1€ + 10€ = 11€.

So when I make A1 the stock entry will have a difference amount of 10€ due to the operation. The counterpart of these 10€ will go into a differences account called “Expenses Included In Valuation” by default.

That’s where my doubts arise.

The operation cost of 10€/h was calculated based on the studio rent + my salary. But these costs are already reflected monthly in the “Office rent” and “Salary” accounts.

So… the operation costs are being accounted for twice!

I know that in SAP you have the normal GL accounts but also some controlling accounts which are purely for analytics and not reflected in the company’s accounts. So for production, these analytics accounts are used. But I don’t know how to do it in ERPNext.

I am currently using perpetual inventory. I guess that, if I turn off that option I will no longer have that problem, right? But I wonder what will I miss. Will I still be able to find out what my real operation costs are?

I am sure I’m doing something wrong but I can’t figure out how to get it right.
Can anyone help me make this work?
I hope my explanation is clear.

Thanks in advance,
Nuno

2

You add operation costs that you want included in your product.

This will be ultimately offsetted by COGS. I don’t think you will book expenses twice. Those expenses will be moved to assets till you sell them off. You will just see a higher value of your inventory and a delayed impact on expenses.

You might want to run the full cycle to see the impact.

CC @nabinhait @Pawan

3 Likes
3

Oh my, you’re right! I just tried to run the full cycle on and indeed the costs are not duplicated.
I’m so happy!

Thank you for your advice!

Regards,
Nuno

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