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#subcontracting charges

  • 1.  #subcontracting charges

    SILVER CONTRIBUTOR
    Posted 9 days ago

    We occasionally use NAV Subcontracting functionality for an offsite packer.

    I was wondering what the best practice(s) is/are for adding the co-packing charges to the cost of the finished good. We send them raw components,

    they pack them into a finished good, and then we pick up the finished good from them, and sell the finished good. I wanted to make sure we are

    capturing the costs in the best way.  We are booking transportation cost to a GL account, but I wanted to get the best CoGs possible.

    Thanks





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    [Paul] [Cochrane]
    [IT Program Manager]
    [Columbus Vegetable Oils]
    [DesPlaines] [IL]
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  • 2.  RE: #subcontracting charges

    NAVUG ALL STAR
    Posted 8 days ago
    Paul,

    To clarify your question, you are looking to understand how to add the cost of transportation for the co-packed items back to your facility? What is your costing method?

    ------------------------------
    Amanda Mayer
    New View Strategies
    "The NAV & BC training and process experts"
    Milwaukee WI
    ------------------------------

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  • 3.  RE: #subcontracting charges

    SILVER CONTRIBUTOR
    Posted 8 days ago
    Edited by Paul Cochrane 7 days ago
    Hi Amanda,

    We use Average Cost.
    Also, we would like to add the per unit cost from the packer and the freight to get a solid landed cost.

    ------------------------------
    [Paul] [Cochrane]
    [IT Program Manager]
    [Columbus Vegetable Oils]
    [DesPlaines] [IL]
    ------------------------------

    Conference-BCNAVUG_200x200


  • 4.  RE: #subcontracting charges

    TOP CONTRIBUTOR
    Posted 7 days ago
    We too are on Average Cost. All of our subcontractors and freight are a set up first as Vendors and then as Work Centers. These Subcontractor Operations and Freight in/out are included in a Production Order. We use the Subcontractor Worksheet to create the Purchase Orders linked to the Production Order. When the invoice is entered and posted, the costs flow into the Production Order. When the Production Order is closed, we run Adjust Cost Item Entries. Voila, all the costs are correctly reflected in the average cost.

    ------------------------------
    Gregory Alford
    Director of Technical Resources
    Tri Star Metals LLC
    Carol Stream IL
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  • 5.  RE: #subcontracting charges

    SILVER CONTRIBUTOR
    Posted 7 days ago
    Thanks Greg!

    ------------------------------
    [Paul] [Cochrane]
    [IT Program Manager]
    [Columbus Vegetable Oils]
    [DesPlaines] [IL]
    ------------------------------

    Conference-BCNAVUG_200x200


  • 6.  RE: #subcontracting charges

    NAVUG ALL STAR
    Posted 7 days ago
    @Paul Cochrane,

    @Gregory Alford's idea is definitely an interesting one and it seems to be working well for them. I would like to point out that Item Charges are meant specifically for the purpose of adding additional costs to inventory. If I were designing this process, I would do the following:

    1. Identify the work center for the subcontractor and their process, with the per unit processing cost (no landed costs).
    2. This will create the PO for their per unit processing fee.
    3. If the freight charges are added by the same vendor, simply update the PO an Item Charge line. The beauty of the item charges is that it allows you to apply costs from any Vendor to the receipt of that inventory, increasing the cost. If the freight is charged by a separate Vendor, either create a new PO to track or simply process a purchase invoice when it is received with an item charge.
    4. Use the application process on the item charge to apply to the receipt of inventory.

    This will separate the manufacturing process and costs from the landed costs. Good luck!
    ​​

    ------------------------------
    Amanda Mayer
    New View Strategies
    "The NAV & BC training and process experts"
    Milwaukee WI
    ------------------------------

    Conference-BCNAVUG_200x200


  • 7.  RE: #subcontracting charges

    TOP CONTRIBUTOR
    Posted 6 days ago
    Make sure that you test this. Not at a spot that can right now. Remember that subcontract POs purchase a service, not an item. If I recall correctly, you cannot apply item charges to a subcontract PO. This was 2016 or 2017, so the details are a little fuzzy.


    Sent from my T-Mobile 4G LTE Device




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  • 8.  RE: #subcontracting charges

    SILVER CONTRIBUTOR
    Posted 2 hours ago
    Thanks all

    ------------------------------
    [Paul] [Cochrane]
    [IT Program Manager]
    [Columbus Vegetable Oils]
    [DesPlaines] [IL]
    ------------------------------

    Conference-BCNAVUG_200x200


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