Subcontracting charges and process

[Former Member]

Hi,

We are implementing the Sub Contracting process, we have sonme restriction from our finance department that tehy do not wnat to include the subcontracter service charges in the total product cost, means payment to the subcontracter should be paid but it should not include in product total cost , for example:

Sub Contracter PO for X Product = 50 pcs

Issued Component A = 10 pcs ( 10 $)

Issued Component B = 10 pcs ( 15 $)

sub contractor charges $ 2 / pcs = 2 x 50 = 100 $

Good receipt of 50 pcs of X product

Total cost in above Good recipt is ( A (10) + B (15 ) + Sub contracter Chrges (100 ) = 125 $

now our finance want to exclude this subcontracting charges from the above process, so that our final product cost should always be same and it should not have any other cost impact. ( because finance is directly crfediting / debiting subcontractor charges from custome and vendor and it is not included in product cost.

or is ther anyway that we can create 0 value subcontracting Purcahse order?

We want to use subcontracting process to monitor the stock status and goods movement at co packer end.

Reagrds

Saeed

[Former Member]

Hi,

Use the Free Good indicator in Purchase order at item level ,by this Gr/IR clearing GL account will no hit the value,Even Po doesnt ask for the Vendor Price.Though it is your companies requirement. Thanking you

[Former Member]

Hi,

THANKS FOR YOUR SOLUTION, WHILE I AM SELECTING FREE GOOD INDICATOR AT LINE ITEM LEVEL, IT IS GIVING ERRO MESSAGE , ENTER GR-BASED IV, EVEN IN SUB CONTRACTING INFO RECORD GR-BASED IV IS NOT SELECTED, AND SHALL I USE THE ACCOUNT ASSIGNMENT T FOR THIS , PLEASE ADVISE

Thanks

[Former Member]

If you look at the subcontract process, you semi finished or finished product which you are going to order from the subcontract vendor is going to be valuated with raw material cost + Vendor service charges.

So when we create subcon PO there 3 different prices involved here.

1. Raw material cost

2. Subcon vendor service charges

3. Semifinished or Finished material valuation.

Out of these 3, which one you are talking about.

If you are talking about the 2 (Subcon vendor service charges ) then you can alsways tick the free of charge on the PO line item so that Service performed with free of cost and your semifinished or finished will be valuated with reference to sum of the ram material costs

You may need to enter the Account assignment category as T.

I hope this informations helps.

Thanks,

Satya