Subcontracting Accounting
Accounting and valuation for subcontracting
The MRP Subcontracting Account module integrates subcontracting operations with stock valuation and accounting. It ensures that when you receive subcontracted products, the costs are properly calculated including both component costs and subcontractor service fees, with accurate accounting entries generated.
Accurate Cost Calculation
When you receive subcontracted products from suppliers, the system automatically calculates the total cost by combining.
Key points
• Component material costs (the parts you sent to the subcontractor)
• Subcontractor service fees (from purchase orders or vendor bills)
Automatic Accounting Integration
The module generates proper accounting entries when.
Key points
• Receiving finished products from subcontractors
• Sending components to subcontractors
• Processing vendor bills for subcontracting services
BoM Price Calculation with Subcontracting Costs
When calculating the cost of a Bill of Materials (BoM) for subcontracted products, the system includes the subcontractor's price from vendor pricelists, ensuring accurate product costing.
Subcontracting Receipt Flow
Steps
1. Create Purchase Order: Create a PO for subcontracted products with the subcontractor as vendor.
2. Receive Products: When you receive the finished products, the system retrieves the subcontracting service cost from the PO or vendor bill, calculates component costs that were consumed, combines both costs to determine the total product value.
3. Accounting Entries: Automatic journal entries are posted to Stock Valuation Account (for finished product value), Production Cost Account (for component and service costs), Input/Output Accounts (based on location configuration).
Cost Calculation Example
If you subcontract a "Dining Table".
Key points
• Component 1 cost: $10
• Component 2 cost: $20
• Subcontractor service fee: $30
• Total product cost: $60
Automatic Tracking
The system automatically tracks this in stock valuation layers and generates the corresponding accounting entries.
BoM Cost Calculation
When you use the "Compute Price" button on a product with a subcontracting BoM.
Key points
• The system finds the vendor pricelist for the subcontractor
• Converts the price to your company currency if needed
• Adds the subcontracting cost to the component costs
• Updates the product's standard price
Prerequisites
Key points
• mrp_subcontracting: Must be installed for subcontracting operations
• mrp_account: Must be installed for manufacturing accounting
• Real-time valuation: Product categories should use automated inventory valuation
• Vendor pricelists: Configure supplier prices for subcontracted products
Account Configuration
Ensure your product categories have these accounts configured.
Key points
• Stock Valuation Account
• Stock Input Account
• Stock Output Account
• Production Cost Account (optional, will fallback to input/output accounts)
Location Accounts (Optional)
You can set specific valuation accounts on production locations for more granular cost tracking.
Standard Subcontracting Receipt
Steps
1. Create a receipt from subcontractor for 10 units.
2. Set the unit price (subcontracting fee) on the stock move.
3. Validate the receipt.
4. System calculates: (Component costs + Subcontracting fee) × Quantity.
5. Accounting entries are automatically posted.
Partial Receipts with Backorders
Steps
1. Create a receipt for 10 units.
2. Receive only 5 units initially.
3. System calculates cost for 5 units proportionally.
4. Create backorder for remaining 5 units.
5. Each receipt gets proper cost allocation.
Tracked Components
When using serial numbers or lot tracking.
Steps
1. Receive finished products with serial numbers.
2. Assign lot/serial numbers to consumed components.
3. System tracks costs per serial/lot.
4. Each unit gets accurate individual valuation.
Different Currency Subcontractors
Steps
1. Subcontractor uses different currency (e.g., EUR).
2. Set vendor pricelist in their currency.
3. System automatically converts to company currency.
4. Cost calculation uses converted amounts.
Cost Methods
The module works with different inventory valuation methods.
FIFO (First In, First Out)
Key points
• Components consumed at their actual cost
• Subcontracting fees added to each receipt
• Most accurate for variable costs
Standard Price
Key points
• Components valued at standard cost
• Subcontracting fees may create price differences
• System adjusts accounting entries for variances
Accounting Entries
Receipt from Subcontractor.
Key points
• Debit: Stock Valuation Account (Total cost)
• Credit: Stock Input Account (Subcontracting fee)
• Credit: Production Cost Account (Component costs)
Component Delivery to Subcontractor
Key points
• Debit: Production Cost Account (Component cost)
• Credit: Stock Valuation Account (Component cost)
Tips and Best Practices
Key points
• Set accurate PO prices: Always specify the subcontracting service fee on purchase orders
• Use vendor pricelists: Maintain up-to-date subcontractor prices for accurate BoM costing
• Configure accounts properly: Ensure all required accounts are set on product categories
• Review valuation layers: Check stock valuation layers to verify cost calculations
• Handle currency carefully: When working with foreign subcontractors, verify exchange rates
• Track components: Use lot/serial tracking for better traceability and cost accuracy
Incorrect product costs
Key points
• Check that the PO line has the correct subcontracting fee
• Verify component costs are accurate
• Review stock valuation layers for the product
Missing accounting entries
Key points
• Ensure product category has real-time valuation enabled
• Check that all required accounts are configured
• Verify the product is set as storable
BoM price doesn't include subcontracting cost
Key points
• Confirm the BoM type is set to "Subcontract"
• Check that vendor pricelist exists for the subcontractor
• Verify the subcontractor is linked to the BoM
Related Modules
Key points
• mrp_subcontracting: Core subcontracting functionality
• mrp_account: Manufacturing accounting integration
• purchase: Purchase order management
• stock_account: Inventory valuation and accounting