Topic: WO journal seems strange
I have raw material A 1 kg and B 1 kg. I want to create finished goods C 1kg using 1 kg A and 1 kg B. I don't have any stock for C. A is costed 20.000 and B is 50.000 (set in standard cost and purchase pricing). For C, I set 0 for all cost (raw material cost, labour cost, and overhead cost). I create a work order and add labour cost 5.000. When I enter this labour cost, an automated journal entry occur which contains the memo like this : "WO labour cost settlement JV for zero/negative respository of C".
What does it mean? What is the logic behind this process? After I produce this work order, I get 1 kg C and the raw material cost become 70.000 and another cost is 0. Shouldn't the labour cost become 5000 as well?
My background is not from accounting but when I asked an accountant, he also confused with this process. FYI, I set my balance with raw material asset 70.000 and payable account 70.000 with no entry in profit and loss statement.