Floor Stock

Floor stock items are bulk issue items—nuts and bolts, for example—that are part of the product structure, but that are usually inexpensive and easily replaced; there is not a need to keep track of them individually.

• To use an item as floor stock, change the item data. Upon work order release/print, the component will be listed in a separate floor stock section on the work order picklist, without a quantity to issue.

• To issue the floor stock components out of inventory to work orders, use Issues Unplanned (3.7). The default debit account is automatically set to the Floor Stock account of the component item’s product line. (Note that this might not be the same as the parent item’s Floor Stock account. For this reason, the Floor Stock account should be the same for all product line records. Upon Work Order Accounting Close (16.21), the cost of any floor stock items is debited to WIP and credited to the Floor Stock account specified on the order.

Because the cost of bulk issue items is included in the rolled-up GL cost of the finished item, it is necessary to adjust WIP for the cost of these items. Otherwise, this cost would get written off incorrectly to variance.

Floor stock is calculated as the standard cost per unit multiplied by the quantity required. This quantity is posted at standard cost to WIP (debit) and Floor Stock (credit). If there is more floor stock issued than the standard calls for, the additional value becomes a method variance.

Note: These items have been issued and should not be cycle counted back into stock.

Note: If quantity tracking is needed as well as cost tracking, rather than issuing the items by Issues Unplanned (3.7), transfer them to a “floor” location. Periodically cycle count this location and debit the appropriate Floor Stock account at that time (rather than Inventory Discrepancy).

Note: One issue that might not be apparent regarding Floor Stock is that floor stock accounts used by the Work Order Accounting Close are associated to the work order, which is determined by the product line of the parent item. If the floor stock component is associated to a different product line, then, if the floor stock accounts vary by product line, you might be crediting a different floor stock account than was debited by the issue transaction. For this reason it is recommended that the floor stock account be the same for all product lines.