Brazilian material ledger

Material Ledger
without Work in Process

This document is property of Softtek®.
Divulgation and copy is prohibited without written permission of
Softtek®
Copyright©
Copyright© 1998 - 2004 Softtek® All Rights Reserved 1

Material Ledger without WIP
Data for Simulation: Standard Price (Raw material) R$ 10,00
Finished Product = R$ 15,00
Planned rate for the activity R$ 5,00 / h

Assets & Liabilities
P&L
Copyright by Softtek

2

Raw material Vendor
(1) 100,00 (1) 130,00

P&L
1 – Buy 10 pieces at R$ 13,00
PRD or KDM
(1) 30,00

The new price is R$ 3,00 greater by unity. This difference
will be posted in PRD
10 x R$ 3,00 = R$ 30,00

3

Raw material Vendor
(1) 100,00 (2) 50,00 (1) 130,00

Consumption of 5 unities at standard
Price of R$ 10,00 for the production order

P&L
PRD or KDM Consumption of Raw Mat. 2 – Consumption of 5 pieces
(1) 30,00 (2) 50,00

4

Raw material Vendor
(1) 100,00 (2) 50,00 (1) 130,00

P&L
PRD or KDM Raw Mat. Consump. Production Order Cost Center
2 – Consumption of 5 pieces
(1) 30,00 (2) 50,00 (3) 25,00 Actual Planned 3 – Worked hours allocated

(3) 25,00

5 worked hours pointed to the Prod. Order
5 h x R$ 5,00 = R$ 25,00

5

Raw material Finished product Vendor
(1) 100,00 (2) 50,00 (4) 75,00 (1) 130,00

P&L
PRD or KDM Consump. Raw Mat. Production Order Cost Center
(1) 30,00 (2) 50,00 (3) 25,00 (4) 75,00 Actual Planned 3 – Worked hours allocated
4 – Order appointment: 5 pieces

(3) 25,00

Send 5 pieces of finished prod. to stock:
Standard cost by unit
Raw Mat. 10,00 +
Activity 5,00 /H 1 unit of Raw Mat. Still in order R$ 15,00

5 pc x 15 = R$ 75,00

6

Raw Mat. Finished Product Vendor
(1) 100,00 (2) 50,00 (4) 75,00 (5) 30,00 (1) 130,00

Sell of 2 finished pieces at
unitary cost of R$ 15,00
Stock: 2 pc

P&L
PRD or KDM Consumption of Raw Mat. Production Order Cost Center
5 – Sell 2 products

(3) 25,00

Cost Goods Sold
(5) 30,00

7

Raw Material Finished Product Cash / Banks Vendor
(1) 100,00 (2) 50,00 (4) 75,00 (5) 30,00 (6) 30,00 (1) 130,00

P&L
PRD or KDM Consump. Raw Mat. Production Order Cost center
(6) 30,00
6 – Salary payment
(3) 25,00

CGS
(5) 30,00

8

Raw material Finished product Cash / Banks Vendor
(1) 100,00 (2) 50,00 (4) 75,00 (5) 30,00 (6) 30,00 (1) 130,00

P&L
(7) 5,00 4 – Order appointment: 5 pieces
(6) 30,00
(3) 25,00 7 – Rate revaluation, from R$

5,00 to R$ 6,00 per hour
(7) 5,00
Revaluation of actual rate and revaluation
of production order referred to 5 pieces consumed.
5pc x R$ 1,00 = R$ 5,00 CGS
(5) 30,00

9

Raw material Finished Prod. Cash / Banks Vendor
(1) 100,00 (2) 50,00 (4) 75,00 (5) 30,00 (6) 30,00 (1) 130,00

P&L
PRD or KDM Consump. Raw Mat. Prod. Order Cost Center
(7) 5,00 (8) 5,00 4 – Order appointment: 5 pieces
(8) 5,00 (6) 30,00

(7) 5,00
8 – Differences calculation and
Order appropriation
CGS
(5) 30,00

10

Raw material Finished product Cash / Banks Vendor
(1) 100,00 (2) 50,00 (4) 75,00 (5) 30,00 (6) 30,00 (1) 130,00

P&L
(1) 30,00 (9) 15,00 (2) 50,00 (3) 25,00 (4) 75,00 Actual Planned 3 – Worked hours allocated
(8) 5,00 (7) 5,00 (8) 5,00 4 – Order appointment: 5 pieces
(6) 30,00

(7) 5,00
Order appropriation
This operation is done only in 9 – Single-level to multi-level
the material ledger closing CGS Difference of Raw Mat.
(5) 30,00 consumed by Order
PRV or KDV
(9) 15,00

11

Raw material Finished Prod. Cash / Banks Vendor
(1) 100,00 (2) 50,00 (4) 75,00 (5) 30,00 (6) 30,00 (1) 130,00
(10A) 15,00 (10C)12,00

Difference in finished products of raw
material consumption and activity:
Raw mat.: R$ 3,00
Activity : R$ 1,00
2 products sold = R$ 4,00 X 2 = R$ 8,00
P&L
(6) 30,00

(7) 5,00
Order appropriation
9 – Single-level to multi-level
CGS
Difference of Raw Mat.
PRV or KDV PRY (10D) 8,00
10 – Closing postings
(9) 15,00 (10B) 15,00 (10B) 15,00 (10A) 15,00
(10C) 12,00
(10D) 8,00

12

Raw Material Finished Products Cash / Banks Vendor
(1) 100,00 (2) 50,00 (4) 75,00 (5) 30,00 (6) 30,00 (1) 130,00
(10A) 15,00 (10C) 12,00

P&L
(6) 30,00

(7) 5,00
Order appropriation
CGS
(9) 15,00 (10B) 15,00 (10B) 15,00 (10A) 15,00
(10C) 12,00
(10D) 8,00

13

Raw Material Finished Products Cash / Banks Vendor
(1) 100,00 (2) 50,00 (4) 75,00 (5) 30,00 (6) 30,00 (1) 130,00
(10A) 15,00 (10C) 12,00

P&L
PRD or KDM Consump. Raw Mat. Production Order Cost center
(6) 30,00

(7) 5,00
Order appropriation
CGS
(9) 15,00 (10B) 15,00 (10B) 15,00 (10A) 15,00
(10C) 12,00
(10D) 8,00
Debit = R$ 145,00
Credit = R$ 145,00
14

Material Ledger
with Work in Process

This document is property of Softtek®.
Divulgation and copy is prohibited without written permission of
Softtek®
Copyright©
Copyright© 1998 - 2004 Softtek® All Rights Reserved 15

Material Ledger with WIP
Data for Simulation: Standard Price (Raw Material) R$ 10,00
Finished product = R$ 15,00

P&L

16

Raw Material Vendor
(1) 100,00 (1) 130,00

P&L
PRD or KDM
(1) 30,00

In buying the new price has an increase of R$ 3,00 by unit.
This difference will be posted in PRD
10 x R$ 3,00 = R$ 30,00

17

Raw Material Vendor
(1) 100,00 (2) 50,00 (1) 130,00

Consumption of 5 unities with standard
price of R$ 10,00 to the production order

P&L
PRD or KDM Consump. Raw Mat. 2 – Consumption of 5 pieces
(1) 30,00 (2) 50,00

18

Raw Material Vendor
(1) 100,00 (2) 50,00 (1) 130,00

P&L
(1) 30,00 (2) 50,00 (3) 25,00 Actual Planned 3 – Work hours allocated

(3) 25,00

5 work hours pointed to the order
5 h x R$ 5,00 = R$ 25,00

19

Raw Material Finished Product Vendor
(1) 100,00 (2) 50,00 (4) 60,00 (1) 130,00

P&L
(1) 30,00 (2) 50,00 (3) 25,00 (4) 60,00 Actual Planned 3 – Work hours allocated
4 – Appointing the Order: 4 pieces

(3) 25,00

Deliver of 4 pieces of finished
products to stock:
Standard unitary cost
Raw Mat. 10,00 + 1 unity of Raw Mat. still in the order
Activ 5,00 /H R$ 15,00

4 pc x 15 = R$ 60,00

20

Raw Material Finished Product Vendor
(1) 100,00 (2) 50,00 (4) 60,00 (5) 30,00 (1) 130,00

Sell 2 finished pieces at unitary
cost of R$ 15,00
Stock: 2 pc

P&L

(3) 25,00

CGS
(5) 30,00

21

(1) 100,00 (2) 50,00 (4) 60,00 (5) 30,00 (6) 30,00 (1) 130,00

P&L
(6) 30,00
6 – Wages payment
(3) 25,00

CGS
(5) 30,00

22

(1) 100,00 (2) 50,00 (4) 60,00 (5) 30,00 (6) 30,00 (1) 130,00

P&L
(7) 5,00 4 – Appointing the Order: 4 pieces
(6) 30,00
6 – Wages payment
(3) 25,00 7 – Rate revaluation going from

R$ 5,00 to
(7) 5,00
R$ 6,00 per hour

Revaluation made in the closing of Mat. Ledger CGS
With reference to the 5 consumed pieces. (5) 30,00
5pc x R$ 1,00 = R$ 5,00

23

(1) 100,00 (2) 50,00 (4) 60,00 (5) 30,00 (6) 30,00 (1) 130,00

WIP
(8) 15,00

P&L
(6) 30,00
6 – Wages payment

WIP R$ 5,00 to
(7) 5,00
(8) 15,00 R$ 6,00 per hour
8 – WIP calculation, differences and
Order Appropriation
CGS
Accounting of one product (5) 30,00
that was not confirmed in the Order

24

(1) 100,00 (2) 50,00 (4) 60,00 (5) 30,00 (6) 30,00 (1) 130,00

WIP
(8) 15,00

P&L
(1) 30,00 (9) 15,00 (2) 50,00 (3) 25,00 (4) 60,00 Actual Planned 3 – Work hours allocated
(6) 30,00
6 – Wages payment

WIP R$ 5,00 to
(7) 5,00
(8) 15,00 R$ 6,00 per hour
This operation is done in the material Order Appropriation
ledger closing CGS 9 – Single-level to Multi-level
(5) 30,00 Difference in Raw Mat. That was
PRV or KDV consumed by the Order
(9) 15,00

25

(1) 100,00 (2) 50,00 (4) 60,00 (5) 30,00 (6) 30,00 (1) 130,00

WIP WPM WPA
(8) 15,00 (10) 3,00 (10) 1,00

P&L
(6) 30,00
6 – Wages payment

WIP PRM PRA R$ 5,00 to
(7) 5,00
(8) 15,00 (10) 3,00 (10) 1,00 R$ 6,00 per hour
Order Appropriation
CGS 9 – Single-level to Multi-level
PRV or KDV consumed by the Order
Difference, in order, 10 – WIP calculates and post a
(9) 15,00 In buying raw material and activity document then
Raw Mat. R$ 3,00 e Activ. R$ 1,00

26

(1) 100,00 (2) 50,00 (4) 60,00 (5) 30,00 (6) 30,00 (1) 130,00
(11A) 15,00 (11C) 8,00

Differences in finished products WIP WPM WPA
of raw mat. consump. and activity:(8) 15,00 (10) 3,00 (10) 1,00
Raw mat.: R$ 3,00
Activity : R$ 1,00
2 products sold = R$ 4,00 X 2 = R$ 8,00
P&L
(6) 30,00
6 – Wages payment

WIP PRM PRA
R$ 5,00 to
(8) 15,00 (11E) 3,00 (10) 3,00 (11F) 1,00 (10) 1,00 (7) 5,00
R$ 6,00 per hour
Order Appropriation
CGS
9 – Single-level to Multi-level
PRV or KDV PRY (11D) 8,00 consumed by the Order
(9) 15,00 (11B) 15,00 (11B) 15,00 (11A) 15,00 10 – WIP calculates and post a
(11C) 8,00 document then
(11D) 8,00 11 – Closing posting
(11E) 3,00
(11F) 1,00
27

(1) 100,00 (2) 50,00 (4) 60,00 (5) 30,00 (6) 30,00 (1) 130,00
(11A) 15,00 (11C) 8,00

WIP WPM WPA
(8) 15,00 (10) 3,00 (10) 1,00

P&L
(6) 30,00
6 – Wages payment

WIP PRM PRA
R$ 5,00 to
(8) 15,00 (11E) 3,00 (10) 3,00 (11F) 1,00 (10) 1,00 (7) 5,00
R$ 6,00 per hour
Order Appropriation
CGS
(11D) 8,00 11 – Closing posting
(11E) 3,00
(11F) 1,00
28

(1) 100,00 (2) 50,00 (4) 60,00 (5) 30,00 (6) 30,00 (1) 130,00
(11A) 15,00 (11C) 8,00

WIP WPM WPA
(8) 15,00 (10) 3,00 (10) 1,00

P&L
(6) 30,00
6 – Wages payment

WIP PRM PRA
R$ 5,00 to
(8) 15,00 (11E) 3,00 (10) 3,00 (11F) 1,00 (10) 1,00 (7) 5,00
R$ 6,00 per hour
Order Appropriation
CGS
(11D) 8,00
Debit = R$ 144,00 11 – Closing posting
(11E) 3,00
(11F) 1,00
Credit = R$ 144,00
29

Accounts Description

UMB: Posted when the new cost calculation is liberated. The difference between standard
price and average price is handled in the closing period like the account PRD.

PRD: Posted when the material price operation is different of the standard price, in case of
raw material and purchasing operations and in the case of finished products and semi
finished products the price difference is between the activity planned value and the actual
activity price.

KDM: Represented by the same PRD operation but only handling with prices differences in
the second or third currencies configured in the ML.
(can be used the same account of PRD)

PRV: Price differences of raw material that was consumed for the production of semi-
finished and/or finished products. In the first moment the system only calculates the value
to be accounted and in the moment of the closing post this operation.
(Create new accounts – can utilize the PRD accounts as models)

KDV: Represented by the same PRV operation but handling only with price differences in
second or third currencies configured in ML.
(can be used the same PRV account)

30


PRM: Difference referring to the raw material used in production order that did not go to
stock, characterizing WIP (work in process).
(Create new account – can be used a PRD account as model)
We suggest the creation of one account only

WPM: Counterpart of PRM operation. In the closing of next period the system verifies the
WIP balance that stays in the order and in the case the order has been closed the system
reverses the previous document and keeps all price differences to be accounted in stock or
CGS.
Obs: WPM should be created as patrimonial account.
We suggest the creation of one account only.

PRA: Difference referent to the activity value utilized in the production order that was not
delivered to stock, characterizing WIP (work in process).
(Create new account – can use PRD as model)
We suggest using only one account)

WPA: Counterpart of PRA operation. In the closing of next period the system verifies the
WIP balance that stays in the order and in the case the order has been closed the system
reverses the previous document and keeps all price differences to be accounted in stock or
CGS.
Obs: WPA should be created as patrimonial account.
We suggest the creation of one account only.

31


PRY: Accounting of price difference balance in the operations of single-level difference,
multi-level or WIP, versus stock (raw material, semi-finished or finished products) or CGS
in the case the materials were sold or consumed.
(Create new accounts – can be used PRD accounts as models)

COC: Accounting values of outgoing materials, for selling or consuming in cost centers and
these operations are not configured in the system in the material ledger to recognize each
operations origin.
(Creation of new accounts – can utilize PRD accounts as models)

The balance of accounts referring to operations UMB, PRD, KDM, PRV, KDV, PRM, PRA
and PRY should be zero. We suggest the creation of Cost Element for all accounts used in
these operations. This will be helpful in the Material Ledger analysis. Should also be created
a new Cost Center for register the accounting of these accounts in CO.

All the operations registered only inside the period will have consistency in the closing

process. Operations realized in the current month, with system date of the previous period
can have values that could not be handled in the current period.

32

Brazilian material ledger

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