Work Order Kitting

Does your business have work orders that stay open for a long time—long enough that a work order is released in one financial period but not closed until the next financial period (or the one after that)? Does your finance or accounting department need to account for inventory used in this kind of long-term work order? 

If the answer is yes, kitting components of work orders can help keep the bookkeeping accurate.

When you kit components to a work order, those components get issued from stock (on your shelves) to WIP (work in progress).

As a result of kitting, your bookkeepers can see exactly where a component is and keep accurate records of your inventory in the company's GL.

When you don't know exactly how many specific components you'll use to complete a work order, or you know that it's likely you'll have to scrap a certain number of components, we recommend recording these components as backflush rather than kit.

For example, if you use fresh fruit in an item you manufacture, it's likely you'll have to scrap a percentage due to spoilage and the quantity you use will vary based on the size of the fruit you get from your supplier. Instead of kitting the fruit, record it as backflush after you've completed the operation that uses it.

See Also

 

 

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Version: Spring 2017