| 1.1. What will happen if the Std Cost is changed during the time the kit is in WIP? | First, it means that the WIP account is proplery address AFTER all kits are closed, and GL records are released and posted.
When there is a cost adjustment while there are components in WIP, the value of the WIP account is not updated until the kits are closed. Then, the WIP value is updated, but erroneously attributed to manufacturing variance instead of cost adjustment.
So, making major cost adjustments when there is a large amount of affected inventory in wip will result in major discrepancies in the reported WIP VALUE from the Production reports and the WIP account value in accounting. When all kits so affected are closed, the discrepancy will be corrected. Put another way, the Production WIP VALUE is calculated on the current inventory in kits (by calculating the remaining assemblies in the kit, extending the QPA for each component based on the current BOM, subtracting any shortages and extending by the CURRENT Standard cost per component) and the GL reports are based on the value at the time of issue to the kit.
At the time this happens, (when the kit is closed) the value of all items issued to the kit is totaled and compared to the value of the totaled BOM component cost for the assemblies completed at the time of the kit closing.. The difference is currently logged as a manufacturing variance.
To validate the standard cost of the items issued in the INVT_ISU records with the current standard costs, system will total that value, and subtract it from the total manufacturing variance for each work order. Then the true manufacturing variance should be realized, and the difference due to standard cost changes posted at the same time to the inventory adjustment account. Then, the total of the manufacturing variance and the total of the cost adjustment change should add up to the total difference between what was actually issued to WIP and what should have been issued to WIP (via the BOM).
bld qty = 100
| action |
BOM qpa |
qty issued |
issued cost |
WIP Value |
Change Std Cost & roll assy |
Extended issue cost |
Extended Bom cost @ close |
Extended Cost Delta |
|
| part1 |
2 |
200 |
$1.00 |
$200.00 |
$1.00 |
$200.00 |
$200.00 |
$0.00 |
|
| part2 |
56 |
5600 |
$1.00 |
$5,600.00 |
$1.00 |
$5,600.00 |
$5,600.00 |
$0.00 |
|
|
part3
|
14
|
1400
|
$1.00
|
$1,400.00
|
$1.00
|
$1,400.00
|
$1,400.00
|
$0.00
|
|
|
part4
|
9
|
900
|
$12.00
|
$10,800.00
|
$12.00
|
$10,800.00
|
$10,800.00
|
$0.00
|
|
|
part5
|
5
|
500
|
$2.00
|
$1,000.00
|
$2.00
|
$1,000.00
|
$1,000.00
|
$0.00
|
|
|
part6
|
7
|
700
|
$2.00
|
$1,400.00
|
$5.00
|
$1,400.00
|
$3,500.00
|
$2,100.00
|
|
|
part7
|
1
|
100
|
$2.00
|
$200.00
|
$2.00
|
$200.00
|
$200.00
|
$0.00
|
|
|
part8
|
1
|
100
|
$13.00
|
$1,300.00
|
$13.00
|
$1,300.00
|
$1,300.00
|
$0.00
|
|
|
part9
|
3
|
325
|
$14.00
|
$4,550.00
|
$14.00
|
$4,550.00
|
$4,200.00
|
$0.00
|
|
|
part10
|
8
|
800
|
$5.00
|
$4,000.00
|
$5.00
|
$4,000.00
|
$4,000.00
|
$0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
| total |
|
|
$53.00 |
$30,450.00 |
$56.00 |
$30,450.00 |
$32,200.00 |
$2,100.00 |
to cost adjustment |
|
|
|
|
|
|
|
|
$30,100.00 |
Adjusted Std cost of components |
|
|
|
|
|
|
|
|
($350.00) |
Manufacturing Variance |
|
| 1.2. The kit amount calls for fractions. Will this cause problems? | | Note that in MANEX, the Unit of Measure “Each” is treated as being an integer unit. That is, you can only have one or multiples of an “Each”, but not a fraction of an “each”. You can have fractions of inches, feet, pounds, ounces and any other Unit of Measure. Although you can use fractions in the Bill of Material, the user can’t kit fractions of “each” parts. MANEX will round up to the nearest whole number. The proper way to approach the situation where the kit amount is expressed in fractions, is to use any Unit of Measure other than “Each”. |
| 1.3. What can cause a difference between the WIP Evaluation Report and the Balance Sheet? | | Miscellaneous kit shortages issued to the kit (items without Item Master Inventory information nor standard cost), will not show on the WIP Evaluation report. Any Journal Entries to the General Ledger WIP account associated with movement, adjustments and corrections will not be included in this report. If a user happened to kit materials to a work order that did not have a standard cost associated with the parts, the Balance sheet will reflect no wip value, but subsequent assignment of standards to the parts will affect the WIP Evaluation report, but not the General Ledger.
In summary, the WIP Evaluation report will provide users with a picture of parts issued to work orders that should be in WIP, and is a guide to the approximate value of WIP Inventory. But it is the General Ledger that keeps accurate track of the real WIP value. |
| 1.4. If there is no actual inventory count for WIP inventory, only a dollar amount, then what is the WIP Evaluation report as found in the Inventory Control reports listing? | | The WIP Evaluation Report is a calculated value of inventory that was kitted. It may or may not equal the accounting value of WIP, as the accounting value can be adjusted by transactions outside inventory, such as journal entries. But the WIP report will be a very close approximation of the WIP value. It is determined by the following sequence:
First, only open work orders are considered. Closed or Cancelled work orders are not included. Then the balance of assemblies due for each work order is determined. For each work order included, the original quantity of each part kitted for the work order is determined based on the kit pull, and extended by the balance of the work order, and by the standard cost of those parts. Then kit shortages are checked. All shortages for the work order are then subtracted from the total value of the work order. This information is then displayed within this report.
This information continues to be reported until the balance of a work order is zero and the kit is closed. At that point, all WIP value associated with the work order is returned to zero.
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