Friday, February 3, 2017

Production Cost at the end of Manufacturing in Odoo

Hello Everyone,

How to calculate Production Cost with Raw material Cost and Work-center Cost ? How to create accounting entries for it ? This is what I will try to explain in the post. The post is for having the functionality in the Odoo v<10.0.

Configuration:

  • Create a Work-center with required information like cost, cost account, financial account, etc.
  • Create a Routing and link the Work-center with it. Link the Routing with Bill of Materials of the Finished good product.
  • Set Stock Valuation Account (Incoming & Outgoing) in 'Production' Location by having any Asset type of account. It is called a WIP account and will be used to track the cost during the Production process.
  • In the Category of Finished good product, Set Costing Method as a Real Time and set Valuation account by having any Asset type of account.

Execution:

  • Once the configuration has been correctly set, Proceed to create a Manufacturing order.
  • Select the Product you want to produce with Bill of Material and the Quantity.
  • Click the Confirm Production button and Work order will be created for the Work-center, linked with the Routing.
  • Reserve the order, Mark it as Started and Produce it. Set the quantity in the wizard which should be produced.

Output:
As the end of the Production order, 

  • Odoo create a move for Raw materials from Stock to Production and update Inventory valuation with the cost of raw materials in the Quant.
  • Odoo also create accounting entry for the Raw material cost by debiting WIP account set in the Production Location and crediting Valuation account from Product category.
  • Odoo create a move for Finished good from Production to Stock and update Inventory valuation with the Raw material cost + Work-center cost.
  • Odoo also create accounting entry for the Raw material cost + Work-center cost by debiting Valuation account from Product category and crediting WIP account set in the Production Location.
  • Odoo also create a separate Analytic entries for the Work-center cost and link the financial account set in the Work-center.

Conclusion:
By configuring and executing the way, I explained, we can calculate the production cost with accounting entries in Odoo. I hope that the post would be helpful to you.

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