Allocate costs to assemblies

Allocate costs to assemblies

Assemblies may incur additional costs which should be included in the product's COGS. These costs are typically applied by other services under their own invoice, which then needs to be allocated to the correct assemblies. Expenses can also be allocated in this way to purchases, stock transfers and production runs.

Costs can be allocated to assemblies proportionally according to the costs of each line of the assembly, or manually with any distribution.

Prerequisites

 

Allocate costs to an assembly by cost

Landed costs can be allocated to an assembly by cost using manual journals, or from a separate invoice.

You can find the Manual Journals tab when viewing an assembly. Allocated expenses will increase the stock on hand value of your inventory. To capitalize a manual journal expense, the debit account should be set to the same inventory account as the item lines.

  

In the Type field, you can select from the dropdown menu how the manual journal expense will be distributed among the assembled products. Select Cost to allocate the journal total proportionally based on the cost of each invoice line.

Allocate costs to an assembly manually

Allocate landed costs manually using a manual journal. You can find the Manual Journals tab from the assembly itself. The debit account should be set to the same inventory account as the item lines in order to allocate the journal cost to the product's COGS.

If Type: Manually is selected, you will see the option to View more. Save the journal and click View more to display assembly lines.

  

Allocate the manual journal amount to the invoice lines as required. Authorize the manual journal to finish.  This can then be edited manually if required.

  

Allocate costs to an assembly from a separate invoice

Costs for assemblies are often applied by third party services under their own invoice, rather than as an additional cost at the time of the task. Allocate these costs to an assembly with the following steps:

  1. Navigate to Purchases → New → Simple Purchase. Service purchases can also be used to allocate expenses.

  2. Select Blind Receipt in the document header.

  3. Enter the landed cost invoice details.

  4. Enter the costs in the Additional Costs panel. In this case, the costs include insurance of $150 and shipping of $350.

  5. Click Authorize.     

  6. Click the Expenses button which has now appeared.
         

  7. Select an expense to distribute.

  8. Click the +Allocation button and select what type of task you want to distribute the expenses to: purchase, assembly or stock transfer/adjustment, or production run.

  9. You can choose to allocate expenses to a single task or multiple tasks. You can either:

    • manually type in the cost you want to allocate to each assembly

    • or click Auto-allocate to have the system do it for you. Allocated costs are calculated proportionally based on the cost of the assembled items.

  10. Save.

  

We can now see that links to the tasks have been created. Click the link to go to the relevant task.
     

The allocated expenses can be viewed by clicking the Manual Journals tab of the linked documents. This can then be edited manually if required.
     

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