Non-Inventoriable Items as BOM Components

To ensure that indirect costs, such as overhead and labor, are properly captured in production costing without affecting inventory valuation, Non-Inventory Items are used in the Production BOM.

These items represent cost elements that are not physically stocked but still contribute to the total cost of producing a finished good.

Item Card

Below is an example of a Non-Inventory Item set up for Overhead:

In the same way, Labour can be registered as a Non-Inventory Item:

💡 Notice that different Gen. Prod. Posting Groups have been created and assigned to the Non-Inventory Items; one for Overhead and another one for Labour. Therefor the General Posting Setup can be configured to direct cost values of different nature into different G/L accounts. Make sure that fields Inventory Adjustment Account" and Direct Cost Applied Account are filled in proper in the posting setup matrix.