Accounting is an essential part of the Manufacturing industry. Having the ability to track the actual cost of a production run is fundamental in making decisions that will gear you toward success.
In this article:
- Learn how to map your Manufacturing Ledgers to Xero and QuickBooks Online.
- Understand how the Manufacturing Ledgers in TradeGecko affect your accounting integration.
- Understand how TradeGecko calculates and updates your accounting platform.
How to map Manufacturing Ledgers to Xero and QuickBooks Online
You can map your Manufacturing Ledgers to Xero during the integration process. In the ledger set up page, you’ll be required to assign the Manufacturing Ledgers to their corresponding ledger accounts in Xero.
You can also change the ledger mapping at any given time by going to My Apps, then click Xero. From here, go to Ledger Accounts and assign the ledgers. Once done, click Save Changes. If there are other expenses that you wish to track, you can create a new custom ledger.
How do Manufacturing Ledgers work?
Note that your Stock on Hand ledger will be adjusted every time there is movement on your Manufacturing Ledgers. Especially when your Production Order is updated to In Progress and Completed.
Understanding your Manufactured Product's Accounting Process
Before you can start creating your Bill of Materials and Production Orders, you will need to create your Manufactured Products (also known as Manufactured Variants) in TradeGecko. During the creation of the Manufactured Product, you will need to add an Initial Cost Price and Initial Stock Count. This is required in order to calculate a product’s Moving Average Cost.
If you do not have an Initial Cost Price and Initial Stock during the creation of the product, put 0 in the field. TradeGecko will generate the Initial Cost Price based on the cost of the first production run.
Ledger mapping of “Other Cost” for Bill of Materials
After the Manufactured Product has been created, you can create your Bill of Materials. Assigning an account ledger on the line items under “Other Costs” is optional at this point.
Accounting for Production Order in Draft status
After creating the Bill of Materials, you will now be able to create the Production Order. When you select which Finished Product to build on the Production Order, TradeGecko will load its corresponding Bill of Materials. If you have assigned a ledger account on “Other Cost” during the creation of its Bill of Materials, the same ledger will automatically be assigned on the Production Order.
Note that Production Order in Draft status will not trigger any data movement for your ledger accounts.
Accounting for Production Order that is In Production
When a Production Order is updated to In Production, the following adjustment will occur.
For this Production Order, we will credit 100 x $8.99 (Watch Strap total cost) + 100 x $48.99 (Watch Face total cost) + 100 x $28.99 (Watch Box total cost) = ($8697) Total Cost of Components to the Stock on Hand ledger.
Accounting for Production Order in Completed status
When a Production Order’s status is updated to Completed, the following adjustment will occur.
After shipping your Manufactured Product, we will credit your Stock on Hand account and debit your Cost of Goods Sold account using the recalculated Moving Average Cost.
In Production and Completed Production Orders will be synced to your accounting integration daily. The sync will take place on the time you have set on your accounting integration’s Sync Timing tab.