When a configured product is received to and shipped from inventory as a finished good, GL transactions to work-in-process (WIP), inventory, and cost-of-goods-sold are based on the configured cost calculated for the item, not the standard cost for the item itself. However, an inventory valuation report uses the standard cost for the item itself, not the configured cost.

This can result in a discrepancy between the account balance for inventory in the GL and the amount on an inventory valuation report. When configured products are in inventory, the inventory valuation report usually understates the value of inventory because it does not include the value of components for those products.

To avoid such a discrepancy, ship all configured products immediately after they are received into inventory. This precaution is especially important at month-end. If a configured product cannot be shipped on the same day it is received, it should be left in work-in-process.

It is impossible to determine the configuration of an item in inventory unless it can be linked back to a specific final assembly order. To provide some traceability when a unit on a final assembly order is received into inventory, assign it a lot or serial number based on the final assembly order.