HOW TO HANDLE RETURNABLE DRUMS AND CARTONS

Returnable Drums

These are created in the stock file as packaging items and are processed as a normal stock item in that they are placed on an order or processed as a goods-in in the normal way when they are supplied by the creditor.

When the drums are returned to the supplier a goods return or a credit note is generated as it would be for any other stock item.

Because the deposit and the credit are usually the same amount of money there are no financial implications as far as the value of the stock is concerned except that the stock on hand of the returnable containers is valued.

Cartons

The problem with cartons that are sent to you containing, for example plastic bottles is that they are usually charged at a higher price than they are credited for.

This means you lose a certain amount of money every time you return a used carton.

The way to handle the ins and outs of the cartons is the same as indicated above for drums; however the stock cannot be valued at the price you were invoiced for the cartons because that is not what you will get for them when you return them.

This means that you should go to the [Stock][Maintenance] screen, click on the <Purchases / Qty /Cost> tag and, under the secondary <Qty / Cost tag> enter the lower cost (i.e the amount you are credited for the cartons) as the Valuation Cost.

As far as accurate costing for manufactured products is concerned, the loss on the returnable carton needs to be taken into consideration.

This may be done by creating a “Stock Item” under Packaging that is a “Service Item” (See the <Static Values> tag.

This item would have, as it’s cost the difference between the charge for the returnable carton and the credit for the returnable carton divided by the number of bottles contained in the carton.

For example, you get 144 one litre bottles in a returnable carton. The carton is charged to you at R20.00. When you send the carton back you are credited with R15.00. Therefore the cost of the “Service Item” is R5.00 divided by 144. i.e. 3.472 cents.

Each time you enter a manufactured Product that is contained in one of the bottles that arrives in this returnable carton, you should add, as a Bill of Materials (BOM), one of the relevant “Service Items”.

The operational implications of the above are that when the supplier adjusts the prices that are charged for returnable cartons, the costs of the “Service Items” need to be manually adjusted.

Consignment Items such as Gas bottles on loan

These may be created as a conventional stock item at no charge. Goods in and Goods out may be carried out in the normal way to control the stock item’s quantities. There are no cost implications.