Use production orders to manufacture inventory items

Production orders are used to record manufacture of finished inventory items using existing inventory and other resources. For example, manufacturing bottled fruit juices requires fruits, bottles, and lids purchased from suppliers as inventory items. These inventory items can be converted into the finished products sold to customers.

Finished goods must be created as separate inventory items before they can be entered on production orders.

When the first production order is created, a Production stage field appears for every inventory item under the Inventory Items tab. By default, all items will be preset to production stage 1. Production stages can be adjusted as described in this Guide to ensure costs of later-stage items in Inventory on hand correctly include costs of earlier-stage items.

Multiple stages are possible, as described in another Guide. Inventory items always purchased from suppliers should be left at the default production stage 1. Items produced from only stage 1 items should normally be designated as stage 2. Finished goods that use stage 2 items should be stage 3, and so on.

Basic production order with inventory items

To record a production order, go to the Production Orders tab and click New Production Order:

Complete the entry screen:

  • Date will be autofilled with today’s date, but may be edited.
  • Reference can be used for any form of identifier. If the box within the field is checked, Manager will assign a number automatically. The program find the highest Reference number among existing production orders and add 1.
  • Description can be any text useful for describing the production order.
  • Select quantity and Inventory item to be produced under Finished item.
  • Select quantity and Inventory item for the first raw material to be used for production under Bill of materials. If more than one inventory item is used, click Add line to add more line items.
  • Location of the finished item(s) can be selected if inventory locations have been defined.

Click Create to save the production order.

Adding non-inventory costs

If non-inventory costs, such as wages, consumables, or overhead allocations are required to produce the finished inventory item(s), check the box to Add non-inventory cost into production. Enter accounts to which the costs will be posted and the amounts. Add lines if necessary:

Manager will add the non-inventory costs to the current average cost of inventory item(s) consumed by the production order to calculate the cost of the produced inventory item(s).

In the Inventory Items tab, the quantity of the manufactured inventory item will increase while the quantities of input inventory items will decrease by the quantities included in the production order.

Brilliant Industries creates a production order to build three table lamps for its north warehouse. Each lamp uses one each of three other parts in stock. Brilliant also includes 75.00 worth of manufacturing labor in the cost of the three lamps (25.00 each):

The Production Orders tab summarizes the order:

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