Company has the following materials warehouses:
- Local spare part warehouse
- Imported spare part warehouse
- Supplementary garment materials warehouse
- Cotton, fiber, lint warehouses
- Fuel warehouse
- Chemical substances warehouse
- Waste warehouse
- There is no regulations of creating product codes in the materials warehouses
1. Collect, check and reconcile the receipt/issuance notes
Collect and check the rationale and validity of the receipt/issuance notes from the relevant departments. Yarn, supplementary materials, spare parts, and chemicals: the inventory accountant will receive weekly (5 days) data files of inventory receipt/issuance notes from the warehouses. All the inventory receipt/issuance notes will be sent to the inventory accountant for double checking and reconciliation.
2. Update quantity and unit prices into the system
The updated data are from 2 sources:
- Goods receipt/issuance report files of the warehouses
- Goods receipt/issuance notes from the warehouses
- The inventory accountant uses a program to calculate the average cost and use as cost of issuance.
- Reconcile with AP and AR
- Provide the AP accountant with data of unpaid received goods
- Currently, the AP accountant does not monitor the details of goods receipt/issuance notes, and thus finds it difficult to track the unpaid receipt notes. The Inventory accountant receives payment data from the AP accountant and the advance payment accountant, then reconciles and stamps on paid goods receipt notes.
3. Post to appropriate accounts
4. Update the cost of materials
Update the cost of materials (for the outsourced contracts) from the outsourcing accountant and cost accountant. Receive materials costing data from the outsourcing accountant:
- The outsourcing accountant uses the issuance cost of the materials from the inventory accountant to calculate the outsourcing cost.
- The inventory accountant then uses the outsourcing cost from the outsourcing accountant to update the inventory cost of the outsourced goods.
Obtain the value of returned yarn and the cost of dyeing-outsourced yarn from the cost accountant.
5. Prepare the inventory report for the all the warehouses.
6. Synthesize the cost of materials/spare parts dispatched to manufacturing factories.
7. Reconcile reports
Reconcile reports of the spinning division and prepare the yarn cost variance table.
Cost of finished yarn
- Cost of receipt yarn: Yarn costing data are usually available latter in comparison with other components, the actual data of the previous month is used to calculate the cost of yarn in the current month
- The yarn cost variance table of the current period is allocated in the current period or in the next period.
8. Calculate the actual cost of materials and tools:
Waste: It is impossible to accurately calculate the inventory cost
- Issuance for sales: the issuance cost is equal to the selling price, then the receipt cost is assigned to the selling price (receipt/issuance costs are equal and the inventory value is zero).
- Issuance for manufacturing: the selling price is used. If the selling price is not available, the current inventory price is used instead.
Spare parts, supplementary materials:
- The averaging method is used to calculate the cost of first manufacturing batch
- Cost of the semi finished product is provided by the cost accountant
- For spare-parts and supplementary materials, only the quantity is recorded. The cost of returned goods is not calculated. Even the returned goods for re-issuance are managed only by the quantity the cost of first issuance is used to calculate the production cost
Prepare the materials and tools allocation report
Submit the actual costing report and the materials and tools allocation report to the cost accountant.
Pass the following reports/data to the general accountant:
- Inventory management report by warehouses and related departments (materials of each warehouse are not categorized)
- Inventory management report of the fibre and yarn warehouses by receipt categories (purchased, manufactured) and yarn categories
- Fuel inventory management report
- Waste inventory management report
- Chemicals inventory management report
- Account posting report by accounts
- The actual costing reports of materials and tools
- The material/s and tools allocation report