Odoo Manufacturing Costing & MRP Accounting Problems
Manufacturing costing breaks in two places: the cost never gets computed (Standard costing with no BOM roll-up, no labour rates), or the cost gets computed from poisoned inputs (wrong receipt prices under AVCO/FIFO). Decide the method deliberately, feed it honest inputs, and the accounting entries stop being scary.
First, confirm the symptom
- Finished product cost shows zero or a years-old number
- Margins on manufactured items look impossibly good (labour is missing)
- Stock valuation account moves nobody can explain
- Same product, wildly different cost after each production run
1. Costing method chosen by accident
Standard, AVCO and FIFO behave completely differently — and the default depends on the product category. Most factories we rescue never chose: they inherited.
- Sit with your accountant, pick per category: Standard for stable engineered products (with periodic revision), AVCO for fluctuating raw materials, FIFO where compliance wants it.
- Set in Inventory → Configuration → Product Categories — and document the decision.
2. BOM cost never rolled up
Under Standard costing the finished product's cost does not update itself — component price revisions leave it stale until someone rolls it up.
- Use Compute Price from BoM on finished products after every material rate revision (monthly ritual, or automated — we script it).
- Verify with BoM Overview: component costs + operation costs should sum to the product cost you quote from.
3. Labour and overhead not in the cost
BOMs without operations (or work centers without cost/hour) cost products at materials only — margins look great until the P&L disagrees.
- Set Cost per hour on each work center (loaded rate: wages + power + overhead share).
- Add real operations to BOMs (see planning guide) — tracked time then feeds actual labour into MO costs.
4. Bad receipt prices poison AVCO/FIFO
Receipts validated at ₹0 (or with the wrong UoM) under AVCO drag the average toward nonsense; every later consumption inherits it. One careless GRN, months of wrong COGS.
- Audit valuation layers for zero/outlier unit costs; correct with valuation adjustments.
- Block zero-price receipts on purchased items (small customization, big protection).
5. Valuation journal entries misunderstood
Automated valuation posts stock input/output/valuation entries at every move — accountants unfamiliar with the interim accounts either fight them or "fix" them manually, breaking the tie-out between stock and books.
- Map the three accounts (stock input, output, valuation) per category and leave them to Odoo — no manual entries there, ever.
- Reconcile monthly: Inventory Valuation report vs the valuation account balance. They must match to the rupee; if not, find the manual entry.
We align costing method, roll-ups, labour rates and valuation accounting — and hand your accountant a monthly tie-out routine. Dhanalakshmi Industries costs production on our setup.
Frequently asked questions
Standard or AVCO for a jobbing factory?
Usually AVCO on raw materials + Standard (rolled periodically) on finished goods — but the right answer depends on your pricing rhythm. That's a one-hour working session with us and your accountant.
Can old wrong valuations be corrected?
Yes — valuation adjustment entries fix book value without touching quantities. Done with lock-date discipline so audited periods stay intact.