Inventory Costing and Assembly Items
After an assembly item has been built, it is treated like an inventory item for costing purposes. The asset, or inventory costing value, of each built assembly item is the total value of the assembly's member items.
These values act like the assembly item's purchase price for inventory costing calculations. Inventory costing is tracked for the assembly item based on the inventory costing method selected on the item record. For more information about assemblies and component costing, see System Cost of Goods Sold Adjustments.
Inventory Costing Using the Standard Costing Feature
For information about inventory costing calculations when the Standard Costing feature is enabled, see Standard Costing and Assembly Build Production Cost Variances.
Inventory Costing and Serialized Assemblies Without Standard Costing
When the cost of a serialized component of an assembly is unknown, NetSuite calculates the cost as follows. NetSuite uses the historical average cost for the component item when they are unbuilt and returned to stock. The sum of the cost of unbuilt items might not match the total purchase cost of the assembly made up of those items.
For example, you have a serialized assembly in stock that costs $12. It is composed of a single serialized component and has a current historical average cost of $15. When you unbuild the assembly, the accounting posts as follows:
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Asset account of assembly: -$15
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Asset account of component: +$15
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Asset account of assembly: +$3
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COGS account of assembly: -$3
You now have the component in stock at a value of $15. The $3 difference between the assembly value and the unbuilt component value is pulled out of the COGS account of the assembly. It then posts back to its asset account. The total amount reduced from the assembly's asset account to create the component is $12, or the value of the assembly.
Related Topics
- Setting Inventory Costing Preferences
- Costing Methods
- Selecting a Default Cost of Goods Sold (COGS) Account
- LIFO/FIFO Inventory Costing and Advanced Receiving
- Viewing Inventory Reports
- Inventory Costing Recalculations
- Troubleshoot Inventory Costing
- Cost Accounting Status on Item Records
- Item Return Costing
- Group Average Costing
- Item Costing