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A predetermined number of labor hours can be charged by adding a WIP Move resource to a routing operation, or you can charge the actual hours to a Manual resource by either:
Resource labor transactions are valued at the rate in effect at the time of the transaction no matter whether the predefined average rate or actual labor rate method is used. As a result, when the same labor subelement or employee is charged to the same job at different times, different rates may be in effect.
When defining item costs, you can associate material overhead(s) to items and define the rate / amount manually using the Average Rates cost type. Once defined, the material overhead(s) are applied whenever the particular item is involved in an applicable transaction. These overheads can be changed at any time. Making a change affects future transactions, but has no impact on the current unit cost in inventory. See: Defining Item Costs.
For purchase order receipts and transfers between organizations, the material overhead amount earned is added to the purchase order cost / transfer cost of the item (but held as a separate cost element) when it is delivered to inventory. For assembly completions, the material overhead amount earned is added to the cost of the completion in inventory, but is never charged to the job.
If more than one rate or amount is defined for the same material overhead subelement, the order of priority is: category level make or buy items, category level all items, organization level make or buy items, organization level all items; with the higher priority rate / amount taking precedence and overriding any other. If you wish to apply more than one material overhead, you must use different subelements. When you change material overhead defaults, that change you make applies only to items defined later; there is no impact to existing items. See: Defining Material Overhead Defaults.
If you enter a scrap account as you move assemblies out of a Scrap intraoperation step, the above accounting transactions are reversed.
User Defined | When you choose this method, a predefined cost in a user-designated cost type is used to value the unit(s) being completed. Select this method to use the current average cost of the assembly or a target cost then use a final completion to flush all (positive) unrelieved costs at the end of the job. |
Attention: Before completing an assembly item using this method, you must ensure that the item's cost in the specified cost type rolls up correctly. In other words, all component and this-level resource and overhead details have been defined.
System Calculated | When you choose this method, you must select a system option. The options are as follows: |
Use Actual Resources | When you choose this option, the unit cost to be relieved from the job is calculated based on actual job charges and is charged to inventory as each unit is completed. This algorithm costs the completions using a prorated amount of actual resources charged to the job and material usages as defined on the assembly bill, multiplied by the average unit costs in the job. Note that for completions out of a nonstandard job having no routing, this algorithm selects the unit cost from the Average cost type. This method works best for jobs that have resources charged in a timely manner. |
Use Pre-defined resources | When you choose this option, resource costs are relieved from the job based on the job routing resource usages. This option works best for jobs with accurate routings. |
If you choose the first completion cost method, User Defined, you must specify which user-defined cost type is to be used in the Cost Type parameter..
Attention: These parameters are defaulted to the WIP Accounting Class window as you define standard and non-standard discrete accounting classes. They can be overwritten except if you set the Default Completion Cost Source parameter to System Calculated. In that case, the System Option that you choose cannot be changed.
No matter which method is used, job assemblies completed in the same transaction have the same unit cost. As part of a completion transaction, the unit cost of the assembly in the completion subinventory is recalculated when it is different from the unit cost used in the completion transaction.
Note: You cannot complete assemblies to more than one subinventory in the same transaction.
The value of the Final Completion option (enabled/disabled) is defaulted based on how the WIP Autocompute Final Completions parameter is set. Using the default eliminates the need to manually choose the option. Final completions ensure that no positive residual balance is left in the job after the last assembly has been completed. Residual balances are handled as discussed below under WIP Job Closures.
Note: When the last assembly in a job is a scrap, a residual balance may remain in the job regardless of how you have chosen to deal with assembly scrap (see Assembly Scrap paragraph above), because the above routine for clearing the job balance is not invoked.
If you return completed assemblies back to a job, the assemblies being returned are valued at the average cost of all completions in this job (net of any prior completion reversals). If the job uses Pre-Defined Resources, the return is costed based on the routing usages.
Just prior to job closure, either all costs in the job have been relieved, leaving a zero balance, or a balance will be left in the job. If the job was completed, all units required were either completed or rejected / scrapped, and the Final Completion option was used, the job balance is zero. The final units completed have absorbed all remaining job costs into their value.
However if the job balance is not zero, it is written off to the elemental variance accounts defined for the job's WIP accounting class. A residual job balance may remain under the following conditions:
Note: Average cost updates should be performed only to correct transaction costing errors affecting items in subinventory. If the cost error originates from a WIP issue transaction, the impacted quantities must be returned to a subinventory, corrected there, then reissued to WIP after the update is completed.
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