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Accounting for Quality cost and use of re-agents in pharma


I shall need to discuss this internally between the other consultants as the solution will cut across Inventory and OPM Costing, before we finalize the approach.

As per my initial discussion with KPMG, treating re-agents like other inventory items as you suggested looks like a feasible option.

1. The purchase and receipt of ingredients can be treated like other inventory items.

2. The consumption of reagents for testing will be recorded by an inventory transaction such as a Move Order which will record the Expending out of the inventoried Re-agents. The consumption will be shown in the Plant ( in the location segment of the account code used in the expense account) for which the reagent is being used.

3. In this way the consumption of reagents for the plants will be accumulated for a period in the designated expense account code with location segment mapped to the plant.

4. At period end this cost will be allocated to products based on the QAD hours we are capturing on the batch for the plants.


I believe that this could be a feasible approach. Please let us know any concerns or views on this.



Please keep in mind, this transaction & subsequent deduction from stock will be done during issue of intact container/pcs/pack of reagent/ parts/ glassware/ accessories for QC analysis purpose, but not as qty (g/ml/ kg) during every analysis. At the end of the month we will get an update stock so that we can determine our purchase requirement excluding the physical loose container/used glassware/used column remaining.
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