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.