The name itself clearly explains the concept. This deals with the material that is going to get billed. Is there any such material used for billing alone? That indirectly means that material bought will not be sold as such or material purchased will not be sold in the same form. Raw materials (RM) will be purchased; processed into Finished Goods (FG) and will be sold as FG. So this feature helps to automate recording of this transformation.
BoM is generally a list of components that are necessary to produce or assemble a stock item, it may be for a single unit or for a batch. A bike manufacturer will have a BoM for a single bike. But a Chef can suggest ingredients for a batch of Laddus; not for only one.
Configuring BoM and setting Components:
As BoM is used FG, necessary RMS should be created before. When creating Stock Item, press F12 key to configure BoM. Set ‘Yes’ to ‘Allow Component list details (Bill of Materials)’ field. This will add an option ‘Set Components (BoM)’ after assigning Unit of Measurement for a Stock Item. Set ‘Yes’ and switch to ‘Stock Item Components (BoM)’ screen. First set the number of unit for which the components are required. Then, select components one by one and specify respective quantity. By using Ctrl + C keys a BoM can be copied.
Creation of Manufacturing Journal Voucher Type:
To automate recording of manufacturing activity, it needs a separate voucher type. To create such voucher type, use this path: Accounts Info / Inventory Info -> Voucher Types -> Create
Type ‘Manufacturing Journal’ in ‘Name’ field, select ‘Stock Journal’ as ‘Type of Voucher’. Set to ‘Yes’ to Use as a Manufacturing Journal’ field and accept the Voucher Type.
Using Manufacturing Journal to record Production:
When pressing Alt, F7 keys from Inventory Vouchers screen, there would be two Voucher Types – Manufacturing Journal and Stock Journal. A normal Stock Journal will have two sides namely Consumption and Production. User has to fill both sides manually. Instead, Manufacturing Journal will seek the name of FG and fill components automatically.
Select Manufacturing Journal, select name of FG, specify the quantity manufactured. List of Components will be automatically filled after specifying the name of FG. Quantity, Rate and Amounts will be filled after specifying quantity of FG. Then, on the right side of the voucher,
Additional Costs incurred for manufacturing can be specified either as percentage or a lump sum amount. This voucher will calculate and display the Effective Rate for a unit manufactured at right side bottom line.
Display of Transfer Analysis:
Transfer Analysis is a statement that shows list of FG produced by using a list of components.
To display it, use this path: Display -> Inventory Books -> Movement analysis -> Transfer Analysis -> Manufacturing Journal.
Movement Analysis with Additional Cost:
Normally, profit margin will be fixed on the landing cost or effective cost of a FG.
Else, it will not fetch the desired profit. To know the Effective Rate of all Manufacturing journals, use this path: Display -> Inventory Books -> Movement Analysis -> Stock Item Analysis -> <Name of FG>.
Chapter – 15 Bill of Material (BoM):
Exercise:
1. A baby’s shop sells gift pack for new born babies. The pack consists the following
| Item | Quantity |
| Baby Dress | 1 Set |
| Baby Cap | 1 No |
| Carry Towel | 1 No |
| Socks | 1 Pair |
There are two suppliers who supply all these items. The Purchase Details are as below:
| Date | Supplier | Item | Qty | Rate |
| 12.4.XX 12.4.XX 14.4.XX 15.4.XX | SM Agencies Priya Fashion Priya Fashion SM Agencies | Baby Cap Socks Baby dress Carry Towel Socks Carry Towel Baby Cap Baby Dress | 15 20 17 20 12 5 10 10 | 17 7 65 25 8 25 17 55 |
On 13.4.XX 12 gift packs were made and 10 packs on 15.4.XX. Rs.10/- per pack will be paid as wages and 10% will be charged for packing expenses. Please advise the effective rates for these two set of packs.
2. A sweet shop owner took a marriage order to deliver 500 Mysurpa on 12.6.XX. His purchases and consumption details are as below.
Required for 50 Mysurpa Purchases
| Item | Qty-Kg | Item | Qty | Rate | |
| Gram Flour | 1.00 | Gram Flour | 12 | 35 | |
| Vanaspati | 0.25 | Vanaspathi | 4 | 120 | |
| Ghee | 0.50 | Ghee | 6 | 200 | |
| Sugar | 1.50 | Sugar | 20 | 30 |
He has to pay Rs.50 per lot as wages and Rs.300 for vessel hire for a day. Calculate the effective rate for 500 Mysurpa. Advise him the exact profit made out of it, if he charged Rs.7/- per Mysurpa.