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Financial Processes in Inventory (5 of 8)

This is the fifth in a series of pages that examine the financial processes in the applications of the Inventory module. They demonstrate, using examples and screenshots, how the debit and credit GL account fields are derived. A summary is provided at the end of each page.

This series will include:

  1. Storerooms/Locations control accounts, GL defaulting in Item Master
  2. GL defaulting in Inventory – Adjustments
  3. GL defaulting in Inventory – Issues and Returns
  4. GL defaulting in Inventory – Transfers
  5. GL defaulting in Inventory – Kitting
  6. GL defaulting in Issues and Transfers
  7. GL defaulting in Inventory Usage and Shipment Receiving
  8. GL defaulting in Stocked Tools

This page will examine:

Disassemble Kit

A kit is an item which is held in a storeroom as a kit of parts, the parts are also held in the storeroom. When you assemble a quantity of a kit, Maximo deducts the required quantity for each part, and increases the quantity of the kit depending on how many whole kits can be assembled. When you disassemble a quantity of a kit Maximo does the reverse, it adds the quantities to the current balance of each part in the kit and deducts the quantity of the kit item that has been disassembled.

To demonstrate the GL transactions, we will use item KIT134 and will disassemble a quantity of 1 and then we will assemble it again.

On Item Master application there is a checkbox (ISKIT) to indicate that the item is a kit item. The kit of parts is defined on the Item Assembly Structure tab, you must identify the parts on this tab first, and save these records, before marking the item as a kit item. A kit item cannot be a rotating item, and it cannot include a rotating item as part of the kit, you will get the following error message “BMXAA2089E – Rotating, lotted, and condition-enabled items cannot be added to a kit structure.”

A kit item can only consist of items with an Issue Cost Type set to AVERAGE or STANDARD. If you try to change the Issue Cost Type of an item, you may receive the error message “BMXAA8939E – You cannot change the cost type to LIFO. The item BOLT125 belongs to the item assembly structure for the kit item KIT134. The supported cost types for kits and kit components are AVERAGE, or STANDARD.”

When using the Disassemble Kit action you indicate the quantity to disassemble and add an optional memo. The unit cost used depends on whether the Issue Cost Type is set to AVERAGE or STANDARD.

A transaction record with type KITBREAK is created in MATUSETRANS. 

The debit GL account and credit GL account are the same. The quantity is negative because it is reducing the balance, the line cost is also negative. The current balance of the kit is reduced by the quantity disassembled.

For each of the components of the kit a similar KITBREAK transaction is created but in MATRECTRANS. 

The debit GL account and credit GL account are the same. The quantity is positive because it is increasing the balance, the line cost is also positive. The current balance of the kit is increased by the quantity of KIT134 being disassembled. The example shown is for item BOLT125 which has quantity of 4 in the kit. The price used depends on the Issue Cost Type of the BOLT125 item, in this case it was AVERAGE, but I have also verified the change of cost when STANDARD is used.

A transaction record with type KITCOSTVAR is also created in the inventory transactions (INVTRANS) object/table. 

This transaction is created irrespective of whether there is any difference in price between the value of the kit and the combined value of all of the components of the kit.

The standard and average costs of the kit and its parts were as follows:

ItemQuantityStandard CostAverage CostLine Cost
BOLT12540.180.180.72
BRACKET20.920.921.84
CAPACITOR10060.890.895.34
RESISTOR211220.920.921.84
KIT134111.9112.009.74

Assemble Kit

I’ve changed the standard cost of KIT134 to 12.25 from 11.91. I have also changed some GL control accounts for some of the items, in order to determine where the GL accounts are being derived from.

When we assemble the kit by a quantity of one. The unit cost used depends on the Issue Cost Type, in this case the average cost is used as the issue cost type is set to AVERAGE for item KIT134.

A transaction record with type KITMAKE is created in MATRECTRANS. 

The debit GL account and credit GL account are the same. The quantity is positive because it is adding to the balance, the line cost is also positive. The line cost is the cost of the assembly of items and quantities in the kit using the Issue Cost Type for each item. The current balance of the kit is increased by the quantity assembled.

If the cost of the items in the kit is less than the average cost of the kit item then, the average cost of the kit will be adjusted downwards, conversely upwards if the items in the kit cost more than the average cost of the kit item.

For each of the components of the kit a similar KITMAKE transaction is created but in MATUSETRANS object/table. 

The transactions have negative quantities and line costs, with both reflecting the quantity of the part in the kit. For example, BRACKET item will decrease its current balance by 2 in this case. The unit costs and line cost use the Issue Cost Type set for each item, AVERAGE in the case of the BRACKET. 

There is no receipt variance transaction when assembling a kit, only when disassembling a kit.

Summary – Inventory – Kitting

When you assemble or disassemble a kit there are financial transactions occurring on the kit item as well as the items in the kit.

Other notable points are:

Assemble Kit

For the Kit Item: A transaction record with type KITMAKE is created in MATRECTRANS. 

For each of the components of the kit: A similar KITMAKE transaction is created but in MATUSETRANS. 

Disassemble Kit

For the Kit Item: A transaction record with type KITBREAK is created in MATUSETRANS. 

For each of the components of the kit: A similar KITBREAK transaction is created but in MATRECTRANS. 

A transaction record with type KITCOSTVAR is also created in inventory transactions (INVTRANS) 

One response to “Financial Processes in Inventory (5 of 8)”

  1. […] I could continue testing, of course – but that concludes this article. There is an article on the Financial Processes of Kitting which you can find here: http://maximosecrets.com/2020/06/02/financial-processes-in-inventory-5-of-8/ […]

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