Stock Control re Job Materials

Topic: Stock Control re Job Materials

A common requirement in the Housing and Construction Industry is to control Stock of materials purchased for subsequent use on the company’s jobs and projects.  The following are suggested ways of handling these purchases and cost reallocation in DATABUILD for Windows.

Method 1 (a basic approach):

This will cater for a basic control of materials purchased for use on various jobs by the company.  It will enable more accurate reporting of the costs on jobs.

The following maintenance should be performed:

1.  Stock of Materials Control Account

create a General Ledger (GL) account in the Assets section for Stock purchased

2.  Stock of Materials Cost Centre

create a Cost Centre (CC) for Stock of Materials and link it to the corresponding GL Stock Control Account

Posting Stock purchase entries:

Supplier invoices (inclusive of GST) are posted to the Balance Sheet/General Ledger; the Stock cost centre; and its related general ledger account.  The value of Stock of Materials on hand is reflected in the general ledger account.  Stock takes are recommended to verify the stock and value.

Recording the cost of Stock used on Jobs:

A journal should be processed on a periodic basis (monthly or more frequently).  There should be some form of record kept to identify the materials drawn from the store and used on particular jobs.  In the journal enter the Job code then Cost Centre code, which will then be followed by the linked General Ledger account being automatically displayed.  Enter the amount (excluding GST) for this Job and Cost Centre then click on the update button below the amount or press the ENTER key.  Positive amounts are used for Journal posting with the nature of the account being sensed by the system to offer a default Debit or Credit condition.

When all Job cost postings have been made for the current period a total Credit entry would be made to the Stock of Materials control account.  Once this entry has been made and recorded to the right of the Journal input screen, and providing the Journal balances overall, it can then be updated into the Database by clicking the update button on the left of the screen.

Method 2 (more detailed approach):

This is essentially the same as method 1, but is appropriate where the company needs to track a variety of materials.

The following maintenance should be performed:

1. and 2. as for Method 1

3.  Stock of Materials Cost Centre Bank

this new CC bank would be linked to Sundry Income and the GL Asset account as in 1.

Create a list of new cost centres to control the various materials, e.g. Floor tiles; Tap fittings; PVC pipe; Pavers, etc.

4.  Stock Job

create a job with a code of say STOCK and link it to the Stock CC bank

Posting Stock purchase entries & Recording the cost of Stock used on Jobs:

as for Method 1, however the posting of Stock invoices will be recorded against the STOCK job and not the Balance Sheet as previously suggested.  And the credit side of the journal for the allocation of stock will also be to the STOCK job.

End of Document