Description
This document explains how to deal with negative figure on COGS account in MYOB.
Detail Steps
After use of BOM (Assembly) for couple of weeks, if your MYOB file ends up with a negative figure on COGS account, this may be due to following issue/s.
Possible Issue 1
• The Bill of Materials contains costings for non-stock inputs
• These inputs are Gas, Electricity, Labour, Freight & Other
• Each input has an associated item code
• These item codes have been linked to COGS
• Each time a completed production work-order is sent to MYOB, the costs against these inputs are crediting the COGS
Possible Issue 2
• Stock adjustment have been entered into WMS
• WMS uses a shrinkage item to allocate the costs
• The shrinkage item has been linked to COGS
• Each time a stock adjustment is sent to MYOB, the costs against these adjustments are crediting the COGS
Solution
Recommendation 1
1. Create new “buffer” accounts for each of the overhead items.
These buffer accounts are separate but grouped with the associated expense account.
For example, Gas:
2-9100 Gas [Header]
2-9110 Gas Expenses
2-9120 Less cost buffer
This gives you the visibility of your actual Gas costs (2-9110) and visibility of how much has been added back/buffered (2-9120)
2. Link the overhead items to their new associated GL account codes.
3. Run a report in MYOB for each month for all overhead items to determine dollar values for each one.
4. Input a journal entry for each month to reallocate values debiting COGS and crediting the buffer account.
Recommendation 2
1. Link the shrinkage item to the associated Shrinkage/stock adjustment GL account code.
2. Run a report in MYOB for each month for the shrinkage item to determine the dollar value for each month.
3. Input a journal entry for each month to reallocate values debiting COGS and crediting the Shrinkage/stock adjustment GL account code.
Related Information
Please note that you may have to review the accuracy of the BOM costings themselves.
This support note only explains the reasons for the negative postings to COGS.
Furthermore, highly recommended to liaise with your accountant to create new accounts and find the best recommendation.