Topic: Advanced Manufacturing and My Doghouse
This is an illustrative example to show areas of improvement in the advanced manufacture of fa.
I’m making a doghouse to be sold.
Dec 20 – purchased woods, glue and nails; properly recorded to "raw material inventory" in fa.
Dec 21 – Built the "BOM" for a doghouse, but since I’m not sure, I will be using "advanced manufacture" so I can issue more materials later.
Dec 22 – Started joining the woods as per the "BOM" and paid for my helper $50 and posted it to "labor cost".
Dec 23- Heavy rain came and to protect my doghouse bought plastic shed and charged it to "overhead cost" $50.
Dec 24- Ran out of glue and nails, in addition to the qty set in BOM, bought more and issued it to the "work order" $20.
Dec 25-30 no movement.
Dec 31 – Printed a "balance sheet" and found out the following:
Cash is less by $120 due to the above 3 expenses (correct).
My raw material inventory originally purchased is intact because no "work order" is processed yet (misleading).
Printed "profit or loss" statement:
I have a calculated return (loss) of -$120, because additional material, plastic shed and labor pay were charged to cost of goods sold account (or an account under this section).
Dec 31- After reviewing the reports, I got up, finished the doghouse and in fa, clicked on "process" (not "process and close" because I may have overhead charges to charge later).
Now "balance sheet" shows raw materials transferred to finished goods, by a value proportional to the qty in "BOM" ONLY, even though the doghouse consumed more material than that.
The $120 under "cost of goods sold section" remained there while I wanted it to add-up in "finished goods inventory".
Later my helper came and complained he has $10 unpaid with me. We checked his hours and he is right. So I paid $10 but to include it to the "workorder", fa has closed it. (Even though I only clicked "process", not "process and close").
Can we not improve advanced manufacture to replicate real life?