Assembly costs in Financial

Costs are incurred during assembly. You do not journalise these consumption costs (such as production costs) when writing off the assembly usage because you already enter costs elsewhere in the financial administration. For instance, the wage costs of the employee who performs the assembly are entered in the payroll administration and not during the assembly. Energy costs are entered in Profit Financieel based on the invoice from the energy provider. This invoice is entered in the costs. The assembly work used some of the energy consumed but if you journalise these costs for the assembly then part of the energy costs are entered twice. This applies for all sorts of articles.

For the assembly consumption you only write off the stock value of the stock articles in Profit Financieel. This is also logical because these are materials/articles that you actually use.

The valuation of the stock of the assembled item is done automatically in Profit. The journalising of the stock of the articles in the assembled item is done using the fixed settlement price and the cost price is used for the costs in the assembled item. You do, after all, want to charge the costs to your debtor.

You have linked the ledger accounts used for the entries to the article groups.

Example:

You have an assembled item, X, which has the following articles and costs:

• 1 piece of article A with a fixed settlement price of € 10.
• 1 piece of article B with an fixed settlement price of € 20.
• 1 piece of article C with a fixed settlement price of € 30.
• 1 cost, D, with a cost price of € 45.

• 1 cost, E, with a cost price of € 5.

  You assemble 1 piece of assembled item X using the articles and incurring the costs specified above. You then journalise in Profit. This results in the following journal entries:

  Journal entry for assembly consumption (writing off from stock of articles A, B and C):

  Assembly consumption account € 60

  To Stock Account €60

  In this journal entry, you only write off the articles for which stock is tracked and not the costs. You use another method to write off the costs (payroll administration; invoices received, etc.).

  Journal entry for entering stock of the assembled item:

  Stock Account €110

  To Assembly account € 110

  Thus with this journal entry all the settlement prices of the articles + the cost prices of the costs are included in the stock valuation of the assembled item. This is, after all, also the actual value of the assembled item. The costs are included because you want to charge these to your debtor and also because they help to determine the article's value.

The cost price of the costs plus the settlement prices of the underlying parts are retrieved when the fixed settlement price of the assembled item is determined. This is done when you select the Automatically determine transfer price check box (select Order Management / Item / Assembled item and go to the Extra tab in the assembled item properties). Thus, the settlement price of the assembled item is calculated using the settlement prices of the underlying articles and the cost prices of the underlying costs. If you deselect the Automatically determine transfer price check box and specify a fixed settlement price for the assembled item yourself then you must take into account the cost price of the costs in the fixed settlement price that you specify.

An insight into the costs of assembly using analysis

In order to gain an understanding of the costs you incur per assembly process step, you can use the journal entries specified above to calculate these costs. The difference between journal entry 1 (assembly consumption) and journal entry 2 (stock valuation assembled item stock) is the cost consumed. If required, you can enter different costs in the assembled item and use them to calculate the amounts.

In this example above, the difference is €50.

You can perform an analysis per cost type to determine the amounts for what is used in an assembly. To this end, you create an analysis in which you retrieve the cost lines from an assembly together with the corresponding cost prices.