 | The master item cost is calculated as the sum of the of component, the fixed cost and the variable cost as defined in the bill of materials.
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 | The master item cost is debited to inventory on hand. |
 | The component item costs are credited to inventory on hand. |
 | The fixed and variable costs are credited to the cost of goods sold. |
 | The difference between the master item cost and the cost that OE day end posted is debited to inventory on hand and credited to COGS.
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 | The debits and credits are reversed for Credit Notes. |