Work in Process Valuation
Work in Process continually maintains the value of work in process, updating it with each transaction. This means that you can report work in process costs quickly and accurately.
Cost Elements
Work in Process maintains and reports work in process values by distinct cost element (material, resource, and so on) even if you assign the same general ledger account to each cost element. You can also report work in process value by cost element within specific WIP accounting classes.
Accounting Classes and Cost Elements
When you define WIP accounting classes you must assign accounts to the cost elements within that class. Accounting classes determine how costs are charged.
Standard Discrete Job Costs
The WIP accounting class that you assign to a standard discrete job determines which valuation and variance accounts are charged. Valuation accounts are charged when material is issued to a job. When the job is closed, final costs and variances are calculated and posted to the variance and valuation accounts associated with the job. Standard jobs that have not been closed are automatically revalued by the standard cost update.
Non-Standard Discrete Job Costs
The WIP accounting class that you assign to a non-standard discrete job determines which valuation and variance accounts are charged. There are two types of accounting classes that can be assigned to non-standard discrete jobs: expense non-standard and asset non-standard.
Non-standard expense jobs are costed using period-based costing. Non-standard expense jobs are not revalued by cost updates. Conversely, non-standard asset jobs are costed much like standard discrete jobs and are revalued by cost updates. Non-standard expense and non-standard asset jobs do not earn material overhead when you complete assemblies. Instead material overhead at completion is posted directly to the subinventory material overhead account.
Repetitive Costs
When you enter a repetitive transaction, costs are charged to the assembly and line rather than to a specific schedule. This is known as flow charging and applies to all repetitive material, resource, and move transactions. Repetitive transactions are allocated to open schedules based upon date the first unit start date (FUSD) starting with the oldest schedule first.
Repetitive assemblies are costed using period-based costing. Period costs for a repetitive assembly are calculated by totalling the charges made to an assembly and line during the period and dividing by the number of assemblies you produced on that line during the period. Valuations and variances are calculated when you close a period. You do not need to close repetitive schedules.
Repetitive variances are calculated by comparing an assembly's period cost with its standard cost. Variances can occur due to scrap, additional resource and overhead charges, and changes in daily quantities.
The period close process writes the variance values to the variance accounts associated with the WIP accounting class you assigned to the repetitive line/assembly association. You can specify which repetitive schedule variances to post to the general ledger when you close an accounting period using the WIP Recognize Period Variances parameter. See: Repetitive Parameters.
Journal Entries
Whenever a job or schedule is charnged, relieved, or closed, journal entries are created. When transactions are transfered to the general ledger or the accouting period is closed, these journal entries are transaferred to the general ledger. See: General Ledger Transfer and Period Close.
See Also
WIP Accounting Classes
WIP Accounting Class Elemental Costs
WIP Value Report
Discrete Job Value Report
Repetitive Value Report
Viewing WIP Value Summaries
