Manufacturing business produces items with the usage of machines,
tools and labor. The core process of manufacturing involves raw
materials that are transformed into finished goods on a large scale.
Such finished goods may be used for manufacturing other, more
complex products, such as household appliances or automobiles, or
sold to wholesalers, who in turn sell them to retailers, who then sell
them to end users - the "consumers".
Stock Item Classification as Raw material, Work in Progress, Finished goods:
The user can classify stock items as per his requirements. In manufacturing concerns the user will primarily have three broad classifications (Stock Groups) i.e.
• Raw Materials
• Work in Progress
• Finished Goods
All items that that are procured to manufacture a particular item is called Raw Material & is grouped
under the group 'Raw Materials', where as, a product whose shape has changed, but has not reached its finished stage is called Semi-finished item. These items will be grouped under the Group 'Work-in-Progress' and any item that is changed its shape / nature completely and reached the final form to sell
are called finished Goods and is grouped under 'Finished goods' group. The user can also create ledgers with the name Raw Materials, Work-in-Progress and Finished goods under the group Stock-in-Hand. Once the user has deactivated the option 'Integrate Accounts with Inventory', based on the Closing balances entered by the user, Tally.ERP 9 automatically displays the total of closing balances of all the ledgers grouped under the group Stock-in-Hand.
Bill of Material with auto adjustments of stock:
In many industries, especially assembly units there are number of components involved in the manufacture of finished items. It is extremely difficult to issue stock items each time a product is manufactured. Such situations can be handled in Tally.ERP 9 by using Bill of Material. To generate a
Bill of Material, create a new item (finished or intermediate product) and specify the components that
go in to manufacturing of that finished / intermediate product. Now, using manufacturing journal, specify the quantity of items to be manufactured. Tally.ERP 9 immediately selects all items that go in to manufacturing of the finished product and automatically adjusts (decreases) the stock. Any additional manufacturing cost like wages, power, water charges etc, can be added to the value of the manufactured product.
Additional cost of Manufacturing with notional value and percentage:
When a product is manufactured, other than the component cost, there are manufacturing costs like
labor, electricity, accessories etc, which will have to be added to the cost of the product. In Tally.ERP 9,
the additional cost can be added to the product while entering stock Journals or at the time of entering a manufacturing Journal (use B.O.M). The user can specify additional cost as a % of the component cost or even specify a notional value.