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Make it,cost it

Bills of materials and production orders that use up components and add finished goods at their real cost.

A production order with the components used and the finished goods made

What goes into each product.

A bill of materials lists the components for a batch and the labour and overheads it takes. Production orders load the components from it, scaled to the quantity you are making.

Stock and cost, both right.

Producing takes the components out of stock at their average cost and brings the finished goods in at the total, labour included, so the margin on each sale is real. As with a sale, a component cannot go below zero stock unless you allow negative stock.