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Inventory Issue Value during WO completion

Dear List,

Since MA recognize only cost method 07. What if cost for raw material (in
part list) is different from from time to time due to purchase and the item
master set to 02 for inventory costing method. Product costing will run only
every half-yearly.

Any reports to generate to show the differences ?

Thanks and regards,
Marshall


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Mike Dupaix

VIP Member
Marshall,

In F4105, your inventory costing method should be set at 07. This is used by all systems (Purchasing, Inventory, Sales) to drive product cost. When product is purchased at a different cost, an adjustment is written at the time of receipt to the GL (F0911) expending the difference between the purchase cost and the 07 cost. These JE's are written based on the purchasing AAI's. You should be able to run a report against the expense account(s) and evaluate the differences based on item and branch using F0911.

> Dear List,

Since MA recognize only cost method 07. What if cost for raw material (in
part list) is different from from time to time due to purchase and the item
master set to 02 for inventory costing method. Product costing will run only
every half-yearly.

Any reports to generate to show the differences ?

Thanks and regards,
Marshall


______________________________________________
FREE Personalized Email at Mail.com
Sign up at http://www.mail.com/?sr=signup




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Mike Dupaix
JDE Certified Professional
(630) 904-5373 – Office/Fax
(630) 750-2500 - Cell
 
Hi Mike,

Are you suggesting that we should change the current cost method in F4105
from 02 to 07 ? May i know any other implication to distribution modules?

Thanks and regards,
Marshall

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lucergui

Member
Re: re: Inventory Issue Value during WO completion

Hi !
It is correct, you should set F4105 to 07 it is mandatory when you use MA. The problem is WO completions (P31113) and backflush (P31114)uses F30026 for JE and Kardex uses F4105, that's the reason because both movements should be 07 always.
There is a report R30543 that controls integrity between F30026 and F4105. Saludos.-

Guillermo Lucero
Manufacturing - Shell Capsa
 

Mike Dupaix

VIP Member
re[2]: Inventory Issue Value during WO completion

Marshall,

I assumed you are using manufacturing. If you are not, then you may use any cost method you prefer. The cost rolls in manufacturing require the use of 07 cost method. Any variance entries still function the same.

> Hi Mike,

Are you suggesting that we should change the current cost method in F4105
from 02 to 07 ? May i know any other implication to distribution modules?

Thanks and regards,
Marshall

-
 

david_mallory

Well Known Member
Re: re: Inventory Issue Value during WO completion

My two cents: I think it would be a good idea, if one is thinking about changing the cost method on One World for some part of inventory (raw material, or ____ ), to run this past one's accounting people, as it will probably cause them problems. They count on costs using a certain method to show up in the GL inventory account. If one goes from 02 moving average to 07 standard cost, assuming standard cost values exist in the F4105 table, the accounting folks will have to invent a routine to capture the variances produced by the 07 standard method and do something with these $$ to get the inventory $$ on the GL back to something consistent with the accounting rules they have to live with. But you guys may understand all this already.
 

Mike Dupaix

VIP Member
re[3]: Inventory Issue Value during WO completion

David,

If you change the cost method, the system uses the zero balance AAI's to record the adjustments between methods. Once again, the costing method is only required to be 07 if you are manufacturing product as the cost roll programs use only cost method 07.

> My two cents: I think it would be a good idea, if one is thinking about changing the cost method on One World for some part of inventory (raw material, or ____ ), to run this past one's accounting people, as it will probably cause them problems. They count on costs using a certain method to show up in the GL inventory account. If one goes from 02 moving average to 07 standard cost, assuming standard cost values exist in the F4105 table, the accounting folks will have to invent a routine to capture the variances produced by the 07 standard method and do something with these $$ to get the inventory $$ on the GL back to something consistent with the accounting rules they have to live with. But you guys may understand all this already.


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Mike Dupaix
JDE Certified Professional
(630) 904-5373 – Office/Fax
(630) 750-2500 - Cell
 
re[2]: Inventory Issue Value during WO completion

Mike,

Yes we are using manufacturing. Go live next week. However due to our heavy
imports on raw material, the price changes every week. Accounts department
would like to keep 02 as costing method and i understand that MA uses only
07.

On the other hand, we cannot affort to run frozen costing everyweek due to
huge number of BOM. Therefore we had concluded to stay 07 for manufacturing,
02 set in the item cost method. Everymonth end, we shall produce a report
based on F4111 (Cardex) and compares against WO issues (F3111) and let the
accounts department charge the differences manually.

Any better idea than this?

Rgds,
Marshall


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Larry_Jones

Legendary Poster
Re: re[2]: Inventory Issue Value during WO completion

Marshall,

Sounds like what they/you want to do is to re-invent the wheel. You don't need/want to reset your frozen costs every week. Set your items to use 07. Purchasing Receiving and Mfg J.E. processing will automatically post variances to accounts based on your AAI setup.

You need to get someone with a Mfg Cost Accounting background to help you set this up properly.

My 2 cents,

Larry Jones
ljones@wagstaff.com
OneWorld B733.1, SP 11.3
HPUX 11, Oracle SE 8.1.6
SandBox: OneWorld XE
 

Mike Dupaix

VIP Member
Marshall,

If your accounting department changes the cost method after the cost rollers, you will have unreported variances occuring during the work order process. Each work order will need to be evaluated and adjusting entries entered into the GL. You will have numerous issues between inventory and the GL.

Your best solution is;

1. Leave the costing method at 7 for purchasing and sales.
2. Add a overhead item to account for the anticipated variance in purchased product to include in your frozen cost rolls.
3. Set up the variance AAI's in purchasing to create variance entries between purchased cost and frozen standard (07). These variances will be calculated at order receipt and voucher match.
4. Valuations can be created against the product on hand and an average cost and then an adjusting entry created from the valuation. This entry should be set as reversing to ensure the next period valuation is based on the frozen standard.
5. As work orders are completed, overhead variances will assist in accounting for the purchased product cost variance.

The difficulty in using a different cost for purchasing and manufacturing is that as product is issued to work orders, those cost flow into work in process and then at completion, to the new product cost. You will not be able to correctly track the standard cost of the manufactured item and may end up with incorrect variances and overhead rates.

Standard costing is used to track costs against a normal steady flow of product and cost. Built into the standard cost (frozen cost) should be items to account for the product cost variance (in your case the average purchase price) from the standard. This would be offset against the variance encountered at actual procurement time.

In reading your e-mail further, you may be limited in what you can change as you will go live soon. The above items should have been addressed long ago.

Good luck and keep us posted on your results.

Mike Dupaix
JDE Certified Professional
(630) 904-5373 – Office/Fax
(630) 750-2500 - Cell
 
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