RE: Standard Cost Variances: Material Cost

Hi Bill Mongan:

Thanks you for your "thoughts."

Your responce made me rethink some of the Mapics costing rules I was taught at 
the Mapics Costing Class I took in Oconomowoc, Wisconsin during May 2000.  I 
went back and looked thru the class book to reread some of those rules.

But first, your questions:

> "it is important to know how you tailored MAPICS (PDM) for costing."

We are tailored for Standard Costing.

> "...ask your accounting group is whether they have general ledger
> interface turned on."

IM transactons are "not" interfaced with our GL.

I believe that the most important statement you said in your reply was:

> "The only difference between actual cost and standard cost on the MO
> would be if the item balance standard cost changes."

This is very relavant because I guess I was expecting something else from the 
Material Cost Variance (maybe like the difference between Standard Cost and our 
lastest actual purchase or manufacturing cost for the item.

So, from what you told me, I believe the answers to my original questions are:

1. How is Unit Cost and Standard Cost populated on the AMIH34 report?

With Standard Costing selected in the PDM tailoring, both these items come 
from:  first, STDUC; if that's $0.00, then next from UCDEF; if that's $0.00, 
the costing is treated as a "Zero Cost Transaction."

2. If I populate the STDUC field with information from PDM (the Standard, not 
Current, Unit Cost), what will the result be?

No Material Cost Variances will arise unless there was a change in the PDM 
Standard Cost (as reflected in STDUC) between the time the raw materials, etc. 
were picked or issued and the time of closeout of the MO.

3. Why doesn't Mapics populate the STDUC field automatically as part of its PDM 
Standard Costing or at least offer this as an option?

This question is still unanswered.

4. Can this be done?

Yes, this can be done (that is, by having STDUC populated with the Standard 
Cost and having UCDEF unpopulated for Item Type 1 and 2 products).

The final byproduct that you get when STDUC is populated (which I forgot to 
consider when I wrote my original posting on this subject thread) is that when 
the MO closes out and the Receipts are recorded,
the following occurs:

1. The Item Type 2 manufactured components used in the MO are costed out as 
Standard Cost.  Therefore all items in the BOM will be costed at Standard Cost.

2. The Receipts at Standard will be costed at Standard Cost.  This helps reduce 
the final closeout varience (which is the difference between the Manufacturing 
"Order History Accounting Summary's" Total Variance and the individual listed 
variences that are all shown on screen AMIH14).

To conclude, I believe the two goals I have by populating STDUC for only Item 
Type 1 and 2 products in an environment where their UCDEF are populated at 
$0.00 is to improve the reporting on the Manufacturing "Order History - 
Accounting Detail Report" (AMIH34) for:

1. In the BOM section: All Type 2 manufactured components will be costed at 
Standard Cost and the BOM will now be complete; and

2. The Total Variance (reported as "Work in Process" on AMIH34's "Cost Total 
Sheet: Closed Orders") will be reduced and will generally reflect those 
individual variances that are reported on the AMIH14 screen.

Well, that's enough on this subject for now.  I look forward to your additional 
comments and hope you have a nice weekend and enjoy the Winter Olympics on NBC.

Regards,
Al Gershen
Grants Pass, OR
aldg@mail.rvi.net

---------- Your Original Reply Message ----------

>From: "Bill Mongan" <bmongan@generac.com>
>Reply-To: mapics-l@midrange.com
>Date: Fri, 15 Feb 2002 12:12:33 -0600

>Some thoughts:
>
>First, it is important to know how you tailored MAPICS (PDM) for costing. If
>you are tailored for standard costing, MAPICS will first go to item balance
>standard unit cost; if that is zero it will proceed to item master unit cost
>default. This is true for all activity, including MO costs. So, it sounds
>like you might want to seriously consider populating the item balance
>record, standard cost field. Then your MO's will reflect the cost of the
>item. The only difference between actual cost and standard cost on the MO
>would be if the item balance standard cost changes.
>
>Also, obviously discuss with your accounting group. There may be some reason
>they do not want item balance standard cost populated. For example, another
>question to ask your accounting group is whether they have general ledger
>interface turned on. If they do, then they must somehow be handling the
>activity on your type 1 and 2 parts manually, since both item master and
>item balance standard cost is zero. If you populate item balance standard
>cost, then transactions on those parts will begin to show activity.
>
>Just some thoughts.
>
>Bill Mongan, CPA
>Cost Accounting Manager
>Generac Power Systems, Inc.
>(262) 544-4811 x2097
>bmongan@generac.com
>