Cost flow & GL impact

The cost flow, end to end

Purchase Receipt
   │
   ▼
Raw Material Inventory (1200)
   │ [Material Issue]
   ▼
Work in Process (1210)
   │ [Completion at standard cost]
   ▼
Finished Goods Inventory (1220)
   │ [Shipment to customer]
   ▼
Cost of Goods Sold (5100)

Four inventory buckets. One cost, flowing through. At each transition, AION’s SLA engine posts a balanced journal entry. The trial balance reflects the physical reality of your shop floor, in real time.

Every account’s role

Account	When it grows	When it shrinks
1200 Raw Material Inventory	Purchase receipt posts	Material issued to a job order
1210 Work in Process	Material issued to a job	Completion posted (FG produced) or scrap posted or job closed
1220 Finished Goods Inventory	Job order completion	Customer shipment (triggers COGS via O2C)
5100 Cost of Goods Sold	Customer shipment	Rare (returns)

Three manufacturing variance accounts sit alongside:

Account	Meaning
5200 Mfg Variance — Scrap	Production waste (bottles failed QA, batches rejected)
5210 Mfg Variance — Yield	Difference between planned and actual output
5220 Mfg Variance — Price	Raw material cost drift (actuals vs. standard)

These are your margin leakage detectors.

Reports AION ships

Report	Answers	Menu
Job Order Cost Sheet	What did this batch actually cost?	Manufacturing → Reports → Cost Sheet
Production Variance Analysis	Where is margin leaking?	Manufacturing → Reports → Variance Analysis
Yield Trend by Product	Is our yield getting better or worse?	Manufacturing → Reports → Yield Trend
Scrap Report by Line / Shift	Where does scrap concentrate?	Manufacturing → Reports → Scrap
WIP Aging	Any open jobs that should have closed?	Manufacturing → Reports → WIP Aging
Formula Cost Roll-up	What does this SKU’s cost look like at today’s prices?	Manufacturing → Reports → Formula Cost
Batch Traceability	What went into this FG lot?	Inventory → Lots → Where Used
Capacity Utilization	Are we using Line 2 efficiently?	Manufacturing → Reports → Capacity

KPIs to watch

KPI	Target	Where
Yield %	> 96% (category-specific)	Production Variance Report
Scrap %	< 2%	Scrap Report
WIP turnover	Days WIP sits open	WIP Aging
Unit cost trend by SKU	Stable ± 2% month over month	Formula Cost Roll-up
Material price variance	Near zero (if rising, renegotiate with supplier)	Variance Analysis
Capacity utilization	75-90%	Capacity Report
Recall trace time	< 1 minute	Test: pick any lot, click Where Used

The real-dollar ROI

Before AION (typical 20M SAR factory)

• Margin reporting is roughly right at best; in F&B the blind spots (yield, scrap, FX variance) typically hide 3-8% of gross margin erosion
• On 20M SAR revenue at 35% gross margin = 7M SAR gross profit
• Missing 5% of that = 350,000 SAR of margin you don’t see
• Recall trace time: 4-8 hours per query (using cold storage receipts + paper records + tribal knowledge)
• Formula changes: verbal, not documented; QA can’t defend a batch under audit

After AION

• Variance reports show exactly where the 3-8% goes — and your team can fix what they can now see
• Typical recovery after 6 months of tight variance monitoring: 2-4% gross margin — worth 140-280K SAR/year
• Recall trace time: < 1 minute
• Formula changes: versioned, approved, documented; audit-defensible

Typical recurring benefit: 200,000+ SAR/year in recovered margin, plus the defensive value of audit-ready batch records (priceless when an auditor or customer actually asks).

What you should do now

1. Do the mango batch lab in Lesson 4 if you haven’t.
2. Open the Production Variance Analysis report in the demo and look at what a real variance analysis looks like.
3. Open the Formula Cost Roll-up for mango juice 500ml — see the unit cost build up from raw materials through packaging.
4. Think about your own top 3 SKUs — what’s your unit cost today? Where might the 3-8% be hiding?

The next course — Record-to-Report — covers the financial close cycle, where these production costs, the sales from O2C, and the payables from P2P all roll up into a monthly trial balance.