Finished good bill of materials

Finished Goods

A finished good is composed of components, packaging, burdens, byproducts, and comments. The cost of a finished good is the sum of its components and its burden costs (costs of production such as machine setup time, labor, allocated rent, and so on).

Finished goods must be defined as items in the Inventory Control application before you can create a bill of material. They are set up as inventoried items at the production facility.

A finished good cannot be set up as a catch weight item. It can be tracked by bin, lot, serial number, or multiple unit of measure. For information, see the Inventory Control User Guide.

Byproducts

A byproduct is a product that is created as the result of producing a finished good. Byproducts are not assigned costs and do not reduce the value of the finished good. All byproduct costs are absorbed as part of the cost of the finished good.

Like finished goods, byproducts must be defined as items in the Inventory Control application and set up as inventoried items at the production facility.

A byproduct cannot be set up as a catch weight item. Byproducts can be tracked by bin, lot, serial number, or multiple unit of measure. For information, see the Inventory Control User Guide.

Components

A component is an item that is assigned to a kit item for production. Both item components and kit items must be defined in the Inventory Control application before the kit and component relationships can be defined. There are four kinds of components:

• Normal

• Packaging

• Offsite

• Rework

Normal components and packaging components must be set up as inventoried items at an inventory location for your company. Examples of packaging components are plastic wrap, boxes, box liners, and pallets.

Normal and packaging components can be set up as catch weight items. They can also be tracked by bin, lot, serial number, or multiple unit of measure. For information, see the Inventory Control User Guide. Packaging components are always optional when assembling a finished good, even though they are part of the bill of materials.

Offsite components are owned by an offsite location and used during the offsite production process. When offsite components are included in the bill of material you must assign an offsite location to the offsite component. Planned quantities of these components are tracked within the Production Order application. The actual quantities used and individual costs for offsite components are not tracked in the Production Order, Inventory Control, or General Ledger applications.

The cost of offsite components, along with any other offsite production costs, are defined as a burden when the work order is returned from offsite production.

After production is complete, a finished good may need to have further work performed on it because of poor quality or incomplete assembly. Another work order can be created for the finished good by adding the item as a component of itself and selecting the rework component type. This can be done by using either Finished Goods (IC62.1) or Work Order (WO30.1).