Mfg Costing and Work Centres

Dear List,

I have a question to do with manufacturing accounting that some of you must have encountered before in determining where the GL entries go for the labour / machine recoveries (or accruals.)

For those that are still with me, the conundrum is this :

Standard JDE manufacturing accounting generates GL entries based on the work order header information. You cannot (there is a SAR Returned Reconsider in Future SAR 2717435) generate entries based on the different work centres that a work order may flow through in its' routing.

My question is what do other people do where a work order may cross more than one work centre, and recoveries for labour and machine costs are required at the work centre level ?

Do you generate multi level bills with intermediaries, each with their own work order (thus requiring multiple completions, work order releasing etc) to accrue the costs of each step to the right business unit, or do you accrue labour and machine costs to a single business for the whole work order and have some other method to allocate the accruals to the work centres (or business units) where the activity actually took place ?

Any thoughts on this would be welcome.

Regards,

Adrian

Xe, HP9000, HP Unix, Oracle 8i, Citrix Metaframe

Adrian:

I have not tried this, but I think it may be worth some testing. There is a field called Cost Type in each routing step (customarily set to D1 etc for outside process costing). Perhaps you could set a cost type up for each work center and put the associated cost type in each routing step. The down side is the Manufacturing AAI tables (31xx 32xx and 34xx) will be huge, and the accruals table will need to point to individual G/L accounts to keep them separate. But it will eliminate the need for individual work orders.

Adrian,
We too have had this issue. I have a report written by an IT person, to give me the work center totals by date range (month), by G/L class for the total time used in each work center. I can then plug the total time into an excel work sheet for each work center that I have designed (using JDE calculations from the cost calc row exit). I have this feed to yet another tab with a journal entry. This way, I have the appropriate labor and overhead consumption going to the correct work center. I only have to run a report and plug in the total times. If you have questions, you may contact me at [email protected].

Carrie

Adrian,

You might consider creating pay points at each work center and recording work order completions at each work center's pay point. After manufacturing accounting is run, each time a pay point quantity is recorded JDE will record an accrual for the labor and overhead earned at each pay point.

Granted, this will calculate the GL entries out at the pay point (work
centre) level, but do you have any thoughts as to how to assign different
financial business units to these entries so that the accruals can be
generated against different business units. From what I can gather this is
where the functionality comes up short.

Regards,

Adrian

Re: RE: Mfg Costing and Work Centres

Have you identified the business units that you will be utilizing to manufacture these items? Typically, the business unit is a level above the work center and the pay points are assigned at the work center level. Each change in business unit would require a change in work order and the cost of labor and overhead could be accumulated at the business unit, work order, work center and paypoint. Each word order completion would capture the accrued labor and overhead at the business unit, work order, work center and paypoint. This information would then be used to determine how productive/effecient a work center is producing product. The metric used in most manufacturing operations would compare the direct labor dollars from payroll coded to that particular work center to the standard labor dollars generated from the work order completions at the work center paypoints. I have developed reporting for the furniture industry that compares by work order and work center the standard labor earned and the actual direct labor from payroll. The client is using today . I hope this helps.

Re: RE: Mfg Costing and Work Centres

Dear all,

I have posted a reply to a very similar question to this elsewhere on this Forum so maybe you guys want to look at that. I have worked on similar requirements to this for years and often see a lot of smoke and mirrors being spoken about the topic. Just to make it clear for everyone: Work Centers have no financial function other than to hold the Rate. Moving WIP through a Route generates NO Financial Transaction except for the Subcontract steps (however it would be impractical to use this feature). Booking time to Work Orders generates the F31122/F3112 Tables and Issuing Material updates F4111/F3111. Between these Tables you can develop performance Reports.

Two important things: do not attempt to break down your Process into multiple WO stages as this defies all common Business sense. You need as few WO's as possible, NOT more! Second point: make you Management Decisions based upon the Performance Reports I suggest and forget all those postings to the G/L. The financial stuff goes through lots of sophisticated Business Functions so avoid chasing your tail by trying to make your figures on your performance reports reconcile back to the G/L. If you want to do that take loads of money and recruit yourself an army of Developers who know C very well....