Cost Accounting and Component Exchange between Customer and Company

This document describes the end to end process of component exchange between customer and company from a cost accounting perspective.

Outcome

All steps in the process are complete, the customer is issued with a credit note for the residual value of the core component and the physical component is returned to the supplier and accounted for. A Core is defined as a component or subassembly such as an engine, gearbox, or fuel pump that can be rebuilt or remanufactured and is often available as part of a dealer exchange program.

Process summary

The flow chart describes the complete core process. Actors are customer, dealer and supplier. The process starts when a dealer makes an acquisition of a core to be put into the core fleet. The invoice matching header in the costing model states what the supplier invoice will contain and the inventory accounting header states what the inventory value of the core will be.

In this example:

Core costing model

The following figures describe what the costing model of a core may look like. The core charge from the supplier is configured as an external charge using cost operator ’77-core charge supplier’.

Inventory accounting

Costing element Amount (dollars) Comment
Costing base: Net price 70000 Cost of goods
Ordering cost 250 External charge from the supplier
Overhead 150 Internal charge
Cost for inter-facility transfer 150 Internal charge
Core charge 20000 External charge from the supplier
Total for accounting 90550  

Invoice matching

Costing element Amount (dollars) Comment
Costing base: Net price 70000 Cost of goods
Ordering cost 250 External charge from the supplier
Core charge 20000 External charge from the supplier
Total for accounting 90250  

Cost Accounting

See Accounting Rules for CA - Cost Accounting for details of the applicable accounting events.

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