6.3 Production cost calculation & Cost of sales calculation (Process)
Period-End Inventory Processing Workflow
When to use: At the end of each accounting period (usually month-end), the inventory accountant must execute a 5-step sequential process to: post inventory vouchers, calculate raw material issue prices, apply finished product receipt prices, calculate cost of goods sold, and transfer data to the general ledger. This is a mandatory process before preparing financial statements.
Example: Process inventory for Jun/2026 — Post all receipt/issue slips, apply weighted average pricing for raw material issues, calculate finished product cost from account 154, apply COGS to account 632, transfer to GL.
To execute the inventory processing workflow, the user proceeds as follows:
Enter the date range in the From Date / To Date fields.
Click Process to start the 5-step workflow.
The workflow consists of 5 sequential steps:
Step 1 — Batch Post Vouchers
Batch-post inventory vouchers (receipt/issue/transfer/adjustment) from Hold to Released status.
Select display scope: All for all vouchers, or filter by module.
Check individual vouchers or check the column header to select all.
Click Execute to batch-post.
Click Close to exit.
Step 2 — Calculate Raw Material Issue Price
Calculate issue unit price for all raw materials in the period using the selected method.
Select Pricing Method:
Period weighted average: Calculate issue price based on the full-period average (most common, per Circular 200).
Moving average: Calculate based on each receipt/issue transaction.
Click Load to load items requiring pricing for the selected period.
Click Calculate to compute and apply issue unit prices.
Review results on the grid — click Save to confirm.
Step 3 — Calculate Finished Product Receipt Price
Calculate finished product receipt unit price from production costs in the period (Account 154 → Account 155).
Click Load to load finished products received in the period.
Click Calculate to compute receipt unit prices from production costs.
Review results — click Save to confirm.
Step 4 — Calculate Cost of Goods Sold
Update cost of goods sold (Account 632) for sales issue vouchers in the period based on issue prices calculated in Step 2.
Step 5 — Transfer to Ledger
Transfer all inventory data (receipts, issues, COGS) to the General Ledger (GL). After this step, inventory data is reflected in GL accounts 152, 155, 156, 632.
Operational Notes:
Steps must be executed in the correct order — do not skip or reorder steps.
If errors are found in a prior step, delete the results and re-execute from that step.
Ensure all inventory vouchers for the period are fully entered before running the process.
Backup data before running the processing workflow.
Note: This 5-step process must be completed before running period-end closing in the GL module and before preparing financial statements.
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