I am working on construction company account who purchase land build it itself and then sale it. there are multiple projects at a time. So, i use divisions (project 1 =P1, project 2 = P2 etc) to segregate there there balances. I created land we bought to sale out and material to construct it as our inventory. i also create a inventory asset for construction cost of their projects project-wise where i using production order i transfer raw material to specified project as well as labour cost to construct will be added as non inventory cost.
See below pic
0P1-L is land asset , 0P1-CC is all project 1 construction cost. and remaining are construction inventory used to buy not yet used in construction.
Now the thing i am facing is i cant find any way to divide project wise inventory on hand (which is segregated project location wise but not display in balance sheet so i may know the inventory monetarily purchased for specific division).
in construction there are 100 inventory items. i cant add 100 inventory items for separately for all projects.
For reporting purposes create a control account composed of special accounts to hold division-wise inventory allocations.
Create sspecial accounts, one for each division (i.e. allocated inventory 001, allocated inventory 002, …) each assigned to its respective division.
Create another special account unassigned to any division just to serve as a contra account in order to avoid double counting of inventory.
At each reporting date, you can create this journal entry:
allocated inventory 001
allocated inventory 002
You can reverse the entry the next day or just before the next reporting journal entry to avoid unnecessary calculations.
This will ensure that your closed reports show the inventory values per division, while the total effect on your balance sheet is exactly Zero. (The control account will add up to Zero) and it shouldn’t show in reports without divisions.
However, for interim reports in between reporting periods, you will have to rely on inventory location report.
@Promo_Brick, I think you are making things needlessly complex. I confess I cannot even follow your workflow with confidence. You seem to be trying to force divisions to do what would be simpler with projects. That option has been available for months now.
Thank u @Ealfardan@Tut i updated my version for projects option.
here in projects i see that all of my expenses and income of a particular project i can link to it.
i have studied the its guide but couldnt clear my point above.
How one item current position i can relate to my different projects. Say brick is using in my 5 projects. i bought 5000000 bricks, how can i know how many brick i have bought for all projects particularly and how much they cost to particular project and how much of them used in production and how much is at location unused.
If i use project tool, it didn’t relate to item quantity and production order. so i can apportion the cost but cant know item current status in production and quantity unused for particular project
If i use division then can only link the item to a project whose division is mentioned in inventory item not in purchase or grn or production order. hence same inventory item need to be entered for every project.
Inventory location helps you but not give you input in getting complete pic of income less expense of a project.
@Tut if you cant understand what i am saying then just tell me any way i can Know "LAND COST , CONSTRUCTION COST, NON-INVENTORY COST, INVENTORY PURCHASED for a particular project in one pic" By not compromising the INVENTORY QUANTITY IN HAND and PRODUCTION STAGE through production order option.
I am not providing construction services, i construct my own land then sell it out. All the land and items to construct is will be my inventory asset unless i sold them and they get to cogs.
I just want to know the current status of my each project , how much my investment in that project is present in which form ( land , construction , inventory expense, non inventory). and after i complete my construction i should know how much inventory i bought for this project remains unused, then i see is there any item i can return or transfer and rest be also treat as cogs for that project.
You need to divide your purchase into multiple line items. For example, 200000 bricks for Project A and 300000 bricks for Project B.
@Promo_Brick, you may have to accept the fact that Manager is not ideal for your particular business and management information needs. Manager is a general purpose accounting program, not optimized for any particular industry or business. To use it, you have to accept its limitations. If you cannot do that, you should search for another—probably more expensive—accounting package. You may, in fact, need to undertake the expense of developing or customizing a package for your specific needs.
I think that inventory items shouldn’t be assigned to divisions at all.
Sure there are edge cases where conglomerates have divisions that keep completely different inventory items, but if we’re going to look at the Market segment of Manager, most of them shouldn’t operate as such.
This is why I believe that inventory locations (instead of inventory items) should be assigned to divisions because this will suit the vast majority of business models including conglomerate-like operations.
The way I see it, this is how the two models compare
Items assigned to divisions (as-is)
Locations assigned to divisions (proposed)
Divisions use same items
Divisions use different items
And it’s less computationally expensive to:
have a smaller number of unique items agregated on two levels in one dimension (divisions composed of locations which aggregate items) which is the idea presented,
have lots more of duplicated items agregated in two different dimensions (current setup)
I really feel optimistic about this idea, since it looks like a win-win from the developer side as well as the user side, especially given the costs vs benefits of both methods.
@Tut you’re right that we can classify inventory item as per division then we can place as per location and then we can sale as per project.
Point is doing this we are not having complete track of inventory record with any of the above tool.
we can divide item using division but cant divide item purchase per division
we can divide item purchase using location but this not create impact on balance sheet profit loss reports.
We can sale inventory as per project but cant purchase or order production as per project.
resulting no complete inventory pic as per quantity and cost for any particular working we can have.
Hope we can link project or division tool at time of inventory purchase (rather than or with) at time of inventory create
@Promo_Brick your process is logically correct, however, as you have found, difficulty arises as the “Inventory on Hand” account can only be allocated to a single division. Also, the project functionality in the program cannot be used as it is not possible to allocate “Inventory on Hand” to a project.
I would suggest that use of Production Orders is not the best way to allocate costs for this type of activity (construction) and it would be easier to allocate materials and labour costs directly to the Turnkey Project special account.
If some materials need to be allocated from Inventory on Hand a journal entry could be used, for example:
All things are there, all tools are there. but cant be segregated.
if you go by quantity through inventory purchase you compromise project tool and can link the item not its quantity of purchase to divisions. (So, need to enter same item for all )
if you go by cost using project tool you compromise inventory quantity/production order.
In production order we can allocate non inventory cost to different division each time. but cannot allocate inventory cost through inventory item purchase to different division each time.
@lubos@Tut doing wonderful work
It wont be new thing as Manager already segregating item by division and its purchase by location. Just need to link inventory item purchase in quantity to either project or division on at least each purchase. It will be brilliant and suit vast business models. As with manager its my third year, and now I have to manage my inventory and accounts on two separate ERP.
@Promo_Brick, I do not understand your complaints. All the things you say you cannot do you actually can do. Your purchases can be assigned to either a division or a project or both. This is true whether you have assigned an inventory item to a division or location or neither. I think your difficulty comes from having used divisions to try to accomplish what projects do. And you have used inventory items to collect construction costs rather than to represent goods held for production or sale. Basically, you have designed a workflow too complex to understand, even after rereading all our posts. And in doing so, you appear to be trying to force divisions, projects, and locations all to fulfill functions they were never designed to fill.