We use 100 jigs in our factory. These jigs regularly require to purchase rods which are replaced with the old rods. If we purchase the rods, they inter the inventory. Currently, they are added to the jigs via a production order.
However, the problem is, we have only 100 jigs, but, if we do it through a production order, it’s as if we now have 100+100 jigs.
Another issue is the cost of Jigs keeps going up in the inventory cost (because of the multiple rods purchases in the past).
I would ideally want to see the rods in the inventory, so that I can track when/where it was purchased and used.
How do I account for this? How should this be recorded?
You may create an expense or maintenance account and whenever u purchase jugs put to that expense account. In this way you will be able to see the record without effecting cost and qty of Jigs.
Some more details about how the jigs and rods are used may help here because there are various industries that use them differently. In any case maybe you should simplify it by not using production orders but to keep the jigs and rods as separate inventory items. Whenever used together this can be recorded as a transaction.
@Muffi_Zainu, you should determine whether the jigs are properly accounted for as fixed assets, rather than inventory. From your description, it sounds like they are fixed assets and the rods are consumable supplies.
Sometimes, accounting for production supplies as inventory is appropriate, but sometimes they are more properly accounted for as current expenses. Consult your accountant.