Re: Shop Order Costs 4.05

Costing is an area we have really analyzed.   We are one of the few
companies which do actual averaging with BPCS.  Most companies use
standards.

The Labor and Overhead from FLT and FOD are collected at the time of entry.
This captures the actually Emp. or Workcenter rates when updated.

The Material FMA will be costed at the CMF cost at the time CST900 is ran.
This is good because you will close and update the cost of the lower level
components after issues have been made.   This way the correct lower level
unit cost is applied to the next level up Shop Order.


What we have noticed is that CST902 closes shop orders by order number.
This will update CMF cost.

 If a higher shop order# is a component of a lesser shop order#.    CST270
will use the updated cost to print the reports.   This will figure a
different shop order unit cost than was updated into CMF for the Item.
   EX.   1   It take A and B to make C
             2   Shop Order#    1001  makes A                1010  Makes C
1200 Makes B
             3  All three shop orders will close during the same CST902
update.   When C closes it will use the updated cost from the Shop order of
item A.    Item B will be the last cost.
             4    When CST270 prints it will use the updated cost on both A
and B, resulting in a different order cost for item C.

To avoid the person closing shop orders must be carful what item are closed
in the same batch.

We do actual costing of the shop orders.    We use Actual Average Costing.

Far as the ITH transactions.   Everything remains in Inventory until
shipped.  Do you really need any transaction posting to the G/L.  until
shipment?  ( I or R trans?)
 When the Finish Good Shop Order closes you may need to adjust Inventory
and Cost of Sales.     The cost at the time of shipment (B trans) will be
the last production cost or estimated/standard cost.   Which is not
nesscary the cost of the items produced this time and are being shipped.
After closing and passing up the actual cost, you will want to compare
differences and make journal entries.     We calculate the Qty which has
left invntory at the prior cost and adjust the differance.

The only way to avoid this is to close all shop orders and put into
inventory.  And then ship out after the shop orders have been closed and
cost updated.

If someone wants to go deeper into BPCS costing you may give me a call.


Roger Henady
Thorco Industries
(417) 682-1340




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