1.
Closing
balance rate.
2.
Pure
purchase rate.
3.
Cost Rate
(or landed cost).
4.
Weighted
Average Rate (WAR)
5.
WIP Rate.
Closing balance rate: It
is necessary to enter the ‘closing stock’ along with ‘closing
balance rate’; as on date when ERP goes live. E.g. as on 31 March
06 (or any date when physical stock is taken of a given location),
xyz item closing balance is 25 nos. and closing balance rate is Rs.
23.00. From 1 April onwards, ERP will capture new rate (if any), by
GRN / GIN, etc. and compute the other rate as explained below:
1.
For Raw
material, bought out items, consumables (these items are purchased
from the market), normally there is no BOM, in other words these are
child items.
Concept for the landed
cost calculation (Or cost rate) is as follows:
ERP
stores the pure purchase rate in the item
master. In GRN, VAT, Excise, Cess
etc., are also captured.
While preparing the GRN,
additional amount is also entered, such as freight, insurance, other
charges, etc.
Usually ERP software will
compute two kinds of rate as follows:
1. Cost Rate = Pure
purchase rate + VAT,
Excise, and all other charges. This will be used for computing
valuation.
2. Pure Cost Rate = Pure
purchase rate + all other charges excluding VAT,
Excise, Cess).
This will be used for preparing quotation, to compute ex-factory
price of a given father item.
-
Weighted Average Rate
(WAR) is computed and stored separately by applying WAR logic,
which takes care of different quantities, purchased at different
rates. For computing WAR rate if item is new the landed cost
itself will be WAR rate, thereafter as and when the GRN is made,
the rate will change.
For manufactured items,
for these items BOM is created.
1.
Factory
made items, semi-finished goods (SFG), sub-assemblies, WIP stock.
2.
Finished
Goods (FG), final product.
ERP will compute the WIP
rate
by exploding the BOM and adding all the child items. WIP rate is stored
on the item master. Total material cost is thus calculated.
Overhead is added to the material cost to compute the WIP rate.
Valuation of all item
(including SFG and FG) is computed by using WIP rate.
1. Click on Inventory
-> report -> item ledger with value
2. This will generate
WAR rate for all raw material, bought-out items, etc.
3. Click on Account ->
transactions -> WIP Rate generation.
4. Click on WIP Rate
generation button.
5. This will update WIP
Rate (as per BOM) on item master for all father items, in ‘WAR rate’
field.
6. Click on Inventory ->
report -> stock statement value.
7. This will give WIP
valuation.
