Accounting for factories in Jordan: materials, stock and cost by machine
A factory buys materials, assembles products and needs the cost of each batch. The bill of materials sets how much of each component goes into one unit, stock is valued at weighted average cost, and costs are tagged by machine or department, so the profit and loss report shows where the money goes. This checklist covers what to check before you buy.
Last updated: 13 November 2026
Why cost depends on the bill of materials
Every batch uses components in fixed amounts, so the cost of a unit is the sum of its components at the cost each one was bought. If the bill, the stock and the purchase cost do not agree, the cost of a product is a guess. The checks below keep those three in step.
What the system must do
- A bill of materials for each product: its components, and how much of each goes into one unit.
- Assembly that moves the components out of stock and the finished units in, with the stock moves recorded.
- Stock valued at weighted average cost for each item and location, with items that have no stock account marked as estimated.
- Materials received in batches against purchase orders, in full or in part.
- A choice for short stock: warn about an issue below zero, or block it.
- Costs tagged by machine, department, project or branch, with roll-ups from child to parent.
- Profit and loss and budgets by dimension, from the same ledger as the balance sheet.
How a batch is costed
- Set the bill: the components of the product and the quantity of each per unit.
- Receive materials against purchase orders. Each batch enters stock at its purchase cost, and the average updates.
- Assemble the batch. Components leave stock, and the finished units enter stock at their cost.
- Tag the journal lines by machine or department, then read the cost by dimension in the profit and loss report.
Example: a batch of 120 units
The bill for one unit uses 0.25 kg of flour, 0.10 kg of sugar and 0.12 kg of butter. A batch of 120 units needs 30 kg, 12 kg and 14.4 kg. Stock on hand covers flour and sugar, but not butter.
| Component | Per unit | For 120 units | In stock | Result |
|---|---|---|---|---|
| Flour | 0.25 kg | 30 kg | 40 kg | Enough |
| Sugar | 0.10 kg | 12 kg | 12 kg | Enough |
| Butter | 0.12 kg | 14.4 kg | 3 kg | Short by 11.4 kg |
With the default setting, the issue is allowed and you get a warning. With the block setting, the batch waits until the butter is received.
Butter cost: 3 kg were in stock at JD 4.00 per kg (JD 12.00). Then 20 kg were received at JD 4.60 per kg (JD 92.00). The average is JD 104.00 ÷ 23 kg = JD 4.52 per kg, and the next issue uses that average.
Checklist at a glance
| Check | What good looks like | Ask the vendor in writing |
|---|---|---|
| Bill of materials | Components and quantities per unit, for each product | How is a bill of materials set up, and how is a change to a bill recorded? |
| Stock valuation | Weighted average cost, by item and location | How is stock valued, and which items are marked as estimated? |
| Assembly | Stock moves recorded for each batch | Does one assembly record both the component moves and the finished units? |
| Material receipts | Purchase orders received in parts | Can each delivery be received in parts, with each receipt posted to the ledger? |
| Short stock | Warn or block, as you choose | Can you choose whether a short-stock issue is warned about or blocked? |
| Costs by machine or department | Tags on invoice, bill and journal lines, with roll-ups | Can costs be tagged by machine, department, project and branch, and rolled up? |
| Reports | Profit and loss by dimension, from one ledger | Do the profit and loss, the budgets and the balance sheet come from the same ledger? |
Ask us before you decide
- Ask for a demo of an assembly, from the bill of materials to the stock move and the cost tags.
- Ask how an item with no stock account is valued, and see the estimated mark on screen.
- Ask which of these features are confirmed for your business before you decide.
Questions manufacturers ask
Does BYTE support bills of materials?
Yes. Bills of materials and assembly are built for production.
How is stock valued?
At weighted average cost for each item and location. An item with no stock account is valued at purchase price and marked as estimated.
Can I see costs by machine or department?
Yes. Dimension tags on journal lines are read by the profit and loss report and by budgets, and one invoice or bill line can be split across machines, departments or projects.
Can BYTE stop an issue when stock is short?
Yes, if you choose to block negative stock. By default, the movement is allowed and you get a warning.
This guide is general information. Tax rules change, so confirm the current rules with your accountant before you decide. Talk to us for a written answer to any question here.