About Transfer Order Costing

The system supports the movement of material through the use of transfer orders. You can make transfers between warehouses within a site, between sites in the same financial entity, or between sites in different entities.

You use transfer order header and line items to capture the information to drive the movement and costing of material. After materials are transferred, it is important to create the supporting Accounting and Material transactions.

Required System Parameters for Account Setup

You must establish these accounts at the time of system setup. If you do not want to collect data at such a detailed level, the same account number(s) could be established as the default.


Parameter Name	Account Name
IntraDivision Clearing	Balance Sheet Account
InterDivision Payables	Balance Sheet Account
InterDivision Receivables	Balance Sheet Account
InterDivision Sales	Income Statement Account
InterDivision Cost of Sales - Matl	Income Statement Account
InterDivision Cost of Sales - Labor	Income Statement Account
InterDivision Cost of Sales - Fixed Ovhd	Income Statement Account
InterDivision Cost of Sales - Var Ovhd	Income Statement Account
InterDivision Cost of Sales - Outside Serv	Income Statement Account
InterDivision Profit on Sales	Income Statement Account
InterDivision Cost- Cost of Goods Sold	Income Statement or Balance on Sales Sheet Account
InterDivision In-Transit Inventory	Balance Sheet Account
InterDivision In-Transit Matl	Balance Sheet Account
InterDivision In-Transit Labor	Balance Sheet Account
InterDivision In-Transit Fixed Ovhd	Balance Sheet Account
InterDivision In-Transit Variable Ovhd	Balance Sheet Account
InterDivision In-Transit Outside Serv	Balance Sheet Account
InterDivision Valuation Variance	Income Statement Account

Landed Cost Accounts

Entries for landed costs use these accounts:

Purchasing Parameters form

Freight Payable
Duties Payable
Brokerage Payable
Insurance Payable
Local Freight Payable

Accounts Payable Parameters form

Freight In Expense
Duties Expense
Brokerage Expense

Simple/Robust Transfer Orders and Costing

The type of transfer order used determines whether inventory moves through In-transit accounts or directly to the buyer's inventory accounts.

Simple transfer orders do not use the To and From In-Transit Accounts or journal entries. But, robust transfer orders cause In-Transit entries to occur. The act of shipping and receiving inventory moves inventory into and from In-Transit accounts.

Examples

See the specific examples of the transfer order costing methods in the system.