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Product group details

Specify the main product group settings, such as type, costing method, and default nominal accounts.

Enter the product group details

Open: Stock Control > Stock Maintenance > Product Groups.

1. Click Add.

   The Add New Product Group window appears.

2. Select the Details tab.
3. Enter a unique Code and Description for the product group.

4. Enter the following settings:

   Items use batch or serial numbers

   Select this to use batch/serial numbers for the linked stock items.

   Once selected the Batch/Serial Numbers tab appears. Use this to specify further information about your traceable items.

   Changing the setting

   You cannot select this once there are stock items associated with the product group with stock levels recorded.

   You can clear the setting, but this clears the setting on each stock item in the product group as well. Any batch or serial numbers associated with stock items in the product group will be lost.

   Product type

   Select the product type from the drop-down list. You cannot change the product type on an individual stock item.

   Choose from:

   • Stock.

     Use this for physical stock items where the broadest control and analysis is required.

     Stock items are included in the stock valuation reports and are subject to quantity checks during stocktaking.

     You can order these items using the purchase order processing system. In sales order processing you can allocate, despatch and discount stock items.

     You must use Stock as the product type for batch/serial numbered items.

     You can use Stock items as part of an assembly using a Bill of Materials (BOM).

   • Miscellaneous.

     Use this for physical stock items where there is no requirement to count them.

     These can be small value items (e.g. screws, bolts) or those you want to control outside of Sage 200.

     Miscellaneous items are not included in the stock valuation reports or subject to quantity checks during stocktaking.

     You can order these items using the purchase order processing system. In sales order processing you can despatch and discount these items.

     You can use Miscellaneous items as part of an assembly using a bill of materials (BOM).

     Miscellaneous items are excluded from cost of sales and stock postings by design.

     These items are not included in stock valuation, so stock value is not increased when miscellaneous items are received or decreased when these items are despatched.

     Although cost of sales postings are not made for miscellaneous items, profit calculation is available for these items in Sales Order Processing.

   • Service/Labour.

     Use this for intangible items such as labour, time and service.

     These are not included in the stock valuation reports and are not subject to quantity checks.

     You can order service/labour items using the purchase order processing system. In sales order processing you can despatch labour/service items.

   Changing the setting

   You cannot change the setting once items are linked to the product group.

   Costing method

   Select the Costing Method for the product group from the drop-down list.

   The costing method is used to calculate:

   • The cost of sales from your sales orders.

   In order to avoid restricting business operations, Sage 200 supports the sale of goods before their cost is known.

   There can be significantly different cost of sale values for the same sequence of purchases and issues depending on the costing method used.

   • In the case of Standard costed items, the cost of sales is calculated using the standard cost at the time of the sale. This is not adjusted when the actual cost becomes known.
   • In the case of Average costed items, the cost of sales is calculated using the average cost at the time of the sale. This is not adjusted when the actual cost becomes known.
   • In the case of Actual costed and FIFO items, the cost of sales is calculated using the average cost at the time of the sale. This is adjusted when the actual cost becomes known.
   • The value of stock.
   • The transactions posted to your stock nominal accounts.

   Manufacturing users

   • If you are using Manufacturing, the cost of stock items issued to works orders.

   In order to avoid restricting business operations, Sage 200 supports the issue of components to works orders before their cost is known.

   There can be significantly different values for the cost of finished goods for the same sequence of purchases and issues, depending on the costing method used for the components.

   • In the case of Standard costed items, the issue cost is calculated using the standard cost at the time of the issue. This is not adjusted when the actual cost becomes known.
   • In the case of Average costed items, the issue cost is calculated using the average cost at the time of the issue. This is not adjusted when the actual cost becomes known.
   • In the case of Actual costed and FIFO items, the issue cost is calculated using the average cost at the time of the issue. This is adjusted when the actual cost becomes known and the works order is closed. Works orders can only be closed when all costs are known.

   Choose from the following costing methods:

   Costing method	Description
   FIFO (First in, first out)	This uses the oldest price paid for the stock item until all stock bought at that price is used. Then the next cost price is used. Example You buy ten items at £10 each. You buy an additional five items at £15 each. You now have 15 items in stock. You sell seven items. The cost price of these items is 7 items x £10 = £70. You sell the remaining eight items. The cost of price of these items is (three items x £10) + (five items x £15) = £105. The cost price of an item is updated when the goods are confirmed. This happens when goods are recorded as received in Sage 200 and the cost price is known.
   Standard	This uses the Standard cost price specified on the stock item record Details tab. The standard cost price can be changed at any time on the stock item. Each time you change the standard price of an item, it is recorded in your Sage 200 database. This is used to calculate the value of your stock retrospectively. Standard costing is useful if you want to value your stock consistently, disregarding the variability of the price you actually pay for it. It can also be used if you need to account for additional costs associated with an item. For example, stock items that are bought in and have some type of processing done to them before they are sold.
   Average	This uses the average buying price of the items currently in stock. The average buying price is calculated in the following way: (Total price paid for the goods in stock) ÷ (the number of goods in stock) Example You buy one item at £10. You sell this item. You buy a second item at £15. You buy a third item at £20. The average buying price is the average cost of the second and third items: (one item x £15) + (one item x £20) / 2 = £17.50. The average buying price is updated each time goods are confirmed as received in Sage 200 with a known cost price. Sometimes is not possible to update the average buying price of the goods. This can occur if the cost price of the goods is updated when the invoice is recorded, and you have a stock level of zero for an item. If you then receive and sell goods before entering the purchase invoice, Sage 200 cannot update the average buying price as the stock level is still zero. In this case, Sage 200 uses the cost price of the goods on the purchase invoice as the average buying price. Example You have a stock item with a stock level of zero. The last time the item was purchased the average buying price was £5. You buy ten more items at £8 each. You record the receipt of the goods in your warehouse, but you do not record the purchase invoice. The cost price of the goods is not confirmed. You sell all ten of these goods. Your stock level is now zero. You enter the purchase invoice and confirm the price of the goods. Sage 200 cannot work out the average buying price in the usual way because (ten items x £8) / 0 = 0. In this case, the average buying price is updated to £8. This is the cost price of the items just purchased. To make sure the average buying price is always up to date, we recommend that you choose to update your cost prices when the goods are received, on the POP Settings Order Processing tab, rather than when invoiced. For more information, see Average buying price.
   Actual	This can only be used with traceable stock items. This uses the price paid for an individual item when it is confirmed and the cost price is known. Example You buy five items at £5 each. They have serial numbers 1 - 5. You buy another three items at £8 each. They have serial numbers 6 - 8. You sell three items with serial numbers 1, 2 and 6. The cost price of these items is (two items x £5) + (one item x £8) = £18.

   You cannot change the costing method on individual stock items.

   Changing the setting

   This cannot be changed once there are items linked to the product group.

   Stock take every

   Enter the number of days a stock take is required.

   Once entered you can see items due for a stocktake on the Stocktake required report. There is no automatic prompt.

   Label Printing option

   Select whether to print labels per item, per batch from the list, or not at all.

   Keep movement history

   Select this to store a movement history of stock items in this product group. This is automatically selected if you are using batch/serial numbers for this product group.

   This records the movement of an item from when it is entered into stock until it is recorded out of stock. You can view transactions to find out information such as the date the item was purchased or the quantities involved.

   The movement history is stored in a current history file. This cannot be deleted. You can then move the history to an archive file and then delete them from Sage 200.

   You must select this if you want to produce a retrospective stock valuation report.

   You cannot change this on an individual product record.

   If you are using Sage 200 Manufacturing, you must select Keep movement history to issue stock items in the product group to a works order.

   Allow negative stock

   About allowing negative stock

   You would only want to allow negative stock because you know that you have stock in your warehouse which has not yet been entered onto the system. If someone wants to buy that stock, or your assembly needs that stock in order to keep working, you must be able to issue it, even though the system doesn't yet know that it exists.

   Implications of allowing negative stock to be issued

   There are implications of allowing negative stock to be issued. These are as follows:

   Stock valuation

   The cost of the negative stock items is not known.

   The Stock Valuation Report values these items,using the average cost price for the item, instead of the actual price. This creates a negative value that affects the overall stock valuation.

   However, this will be corrected once the goods are entered into stock.

   Cost of Sales and Asset of Stock postings

   When you issue negative stock, the cost of sales posting is made, using the average cost price and the balancing posting is to the asset of stock account.

   However, when you enter the stock on the system, or an invoice for the items, then the cost becomes known and there may be changes to the issued value. If so, there are adjustment postings to the cost of sales and asset of stock accounts.

   The adjustment postings may be in different accounting periods from the original postings. This depends on the elapsed time between issuing the stock and confirming the stock price. However, this can affect the Profit and Loss and Balance Sheet for an accounting period.

   Issuing to a project

   If you issue negative stock to a project, the project posting is based on average cost price.

   The project posting is not updated, even when the real cost is known. Therefore, the cost posted to the project may be over or under stated.

   Issuing to BOMs

   If you issue negative stock to a BOM, the cost is based on the average cost.

   The cost does not get updated, even when the real cost is known, so the cost of the built item may be over or under stated.

   Issuing to Manufacturing

   The costs of negative stock are updated in manufacturing modules once they become known.

   However, you cannot complete works orders until the real costs are known. This can cause problems as the built item will be in stock but at an unconfirmed cost.

   Stock takes

   You can carry out stocktakes on items with negative stock levels, using the Allow entry of stock counts for items with negative stock levels setting on the Stock settings Options tab.

   However, if you do this, the system will not record stock levels accurately because you are circumventing its controls.

   For example, the system records show that you have a negative number of three (-3) items in stock. You have received a purchase order for ten items, but not yet entered it, so three of these items have been issued, causing the negative stock value.

   When you carry out a stock take, the actual count is seven. This is compared to the system negative number of three, and the result is ten items are added to stock by the stock take process. The stock system now says correctly that you have seven items in stock.

   However, when you then record the purchase receipt on the system, the ten items are added to the stock again by the stock take process. The stock system now says incorrectly that you have 17 items in stock. The ten items on the purchase order have been double counted.

   Select this for:

   • Non traceable items

     Select this to allow the stock item to be allocated, issued or despatched when there is not enough stock available.

     If you are posting to the Nominal Ledger you may find discrepancies between the cost of sales shown in the Nominal Ledger and the total cost of stock recorded in the stock history for the stock item. When a sales order is processed for a stock item with a negative balance, the cost of sales is calculated using the last available buying price for the stock item. This is not adjusted when stock is subsequently added to the system. This means that the actual buying price for the stock items could be higher or lower than that the cost of sales recorded in the nominal ledger.

   • Traceable items

     Select this to allow stock items to be allocated when there is not enough stock available. Once selected, you cannot set batch numbered items to be supplied to a customer from a single batch.

   You cannot use negative stock if you have chosen to use the Average stock costing method. Items that do not allow negative stock can still be allocated when there is insufficient stock using processes in the Stock Control module, but they cannot be issued.

   Use item description on orders and invoices

   Select this if applicable.

   Use reverse charge VAT rules

   Select this if the items in this product group are liable for reverse charge VAT rules.

   You can change this on individual stock items. It is not applicable to Miscellaneous or Service/Labour product types.

   The reverse charge VAT rules cover any business selling or buying specified ranges of electronic devices such as mobile telephones and computer chips when an invoice for a UK VAT registered customer exceeds £5000.

   In the past a credit note is created for the return of the goods on the same value as the invoice. This amount is paid even if the credit note is less than £5000.

   Under the new rules, the seller does not charge the buyer any VAT. However the invoice must clearly show the items that attract the reverse charge and the amount applicable. The HMRC have indicated that the wording should follow certain styles. The reports and invoices in Sage 200 follow these guidelines.

   The buyer must record items where reverse charges have been applied separately from items here normal VAT has been applied. This allows you to identify these reverse charges when you run your VAT Return.

   When you set up your product group, you can now specify whether the products will use the reverse charge VAT rules.

   This option can also be set on the individual stock record. The option on the stock record will override the settings set up here.

   For more details, please refer to the HM Revenue and Customs website (www.hmrc.gov.uk).

   Default Nominal Codes

   These are the nominal accounts you want to use to post stock values to the Nominal Ledger.

   The default nominal account for the stock item is displayed when processing transactions in Stock Control, Sales Order Processing or the Purchase Order Processing.

   You can change the default nominal code when you are entering a transaction in Stock Control. You can only change the default stock nominal code in Sales Order Processing or Purchase Order Processing, if you have the set the modules to allow this, using the settings Order Entry tabs.

   There are four default nominal codes, two for Balance Sheet postings and two for Profit and Loss postings.

   Specify the nominal accounts:

   • Stock: Select the Balance Sheet nominal account for stock assets used when recording stock in and out of the system.
   • Revenue: Select the Profit and Loss nominal account used to post the value of stock when it is sold.
   • Accrued receipts: Select the Balance Sheet nominal account used when goods have been received but not invoiced. This type of transaction is recorded in the Purchase Order Processing module.
   • Issues: Select the Profit and Loss nominal account used to post the value of stock issued.