Alert on Inventory item

1

Aladair,
Please when you click INVENTORY ITEM on manager, the above alarm shows up (attached).

Screen Shot 2020-06-05 at 15.49.12 - 1st Alarm
Screen Shot 2020-06-05 at 15.49.12 - 1st Alarm1440×900 193 KB

When you click on it, the next screen shot shows up.

Screen Shot 2020-06-05 at 15.49.20 -2nd Alarm
Screen Shot 2020-06-05 at 15.49.20 -2nd Alarm1440×900 162 KB

Kindly assist as I do not understand what it means.

Chinyere

2

Read the Guide: Manage production stages | Manager.

3

Tut,
I have gone through the recommended guide, but need to ask the following questions:

Does the Batch update, which elevate one production stage to another stage has any effect on the cost of inventory items already keyed into the system by moving upward from say Production stage 1 to 2.

Or distort the programming in terms of the Balance sheet items for stock values and the profit and loss items for expense.

Cmnak

4

It depends. I’d say do it and check if there is a difference. Most businesses shouldn’t see a difference or the difference will be very marginal (a few cents).

5

Ok. Thank you.

6

@cmnak, understand several things:

  • The entire point of introducing production stages was that inventory costs could be transferred incorrectly to items produced under some circumstances, but not all. Whether they were captured correctly depended on the dates transactions were entered and other factors. So, if they are now captured correctly, it is logical that differences could occur.
  • Many users will notice no differences, because all their production orders are single stage or they do not have overlapping orders (or both). Even with multi-stage production, if you space out the production orders and do not have multiple transactions “competing” for the same inventory, you will have no differences.
  • Perhaps most important, any differences will eventually sort themselves out. The issues that could occur without proper identification of production stages involved inventory costs being assigned incorrectly to higher stage items. But, if this happened, for example overstating costs, a later transaction would understate costs for the same item, balancing out the difference. If your turnover rate for the item is high, this could happen before the end of an accounting period and be unnoticeable. But if turnover is low, the difference could linger for some time. Eventually, however, the total cost of goods sold must equal the sum of purchase costs for all input items plus any non-inventory costs added. There is no way for costs to escape the system or mysteriously appear. Previously, though, they could be temporarily distributed incorrectly.