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DickWhat a GREAT Question! ... I hope we see lots of educational replies to your thread. At month end, cycle counting, and physical inventory time, there is always WIP consisting of production that is between some discrete item identification (not in book inventory). Our version of BPCS (405 CD) not seem to have vanilla support for good tracking of this value, from an accounting perspective.
Total $ costs by item class is very important to some of our management.If I was tasked with obtaining a value of cost of inventory tied up in WIP, one approach might be:
For shop orders currently open ... that are not yet completed, or killed* FMA has raw materials consumed so far (removed from book inventory) ... multiply that times cost of those materials ... add this to the WIP $ total ... this can be totalled by Item Class * FOD has labor cost for making the partially completed shop orders ... add this to WIP $ total * FSO has what items quantities have been partially completed back into book inventory totals ... multiply times cost and subtract this from the WIP $ total. ... this can be totalled by Item Class ** Possibly subtract the FOD labor cost from FSO total, if we doing total WIP by item class * The difference (+ FMA costs + FOD costs - FSO costs) would be the value of inventory in WIP that is currently off the book inventory totals
For shop orders which have been killed, but not yet purged, we can extract the $ value that went into WIP, but will never come out again, that may need to be scrapped. This reflects production that was in the works when the customer orders got cancelled, or changed, or something else going on, such as errors in labor reporting and inventory tracking.
For shop orders which have been completed, the value of manufactured inventory normally should equal the consumed inventory plus the labor costs. We do sometimes decide to close a shop order at some quantity other than what was originally the order quantity. In some such cases there would be a minor difference between cost going into WIP and $ value coming out.
I think scrap impact should be ignored for purposes of this discussion, but there is also in the costs: repair; setup; downtime; indirect.
Note that how we have our routings setup ...* various production can go through different operations between discrete items in our inventory
* components get consumed at the operation that actually uses it * at the last operation, the completed work goes into book inventoryThus, WIP is like an Accounting BLACK HOLE, where inventory value disappears into the Black Hole at the operations where the components get applied to WIP, then when a discrete item is completed, we have Production Receipt, which puts the $ value into inventory, back out of the Black Hole.
midrange.com
We are on BPCS 8.0, with frozen standard costs.
Our Accounting people cost individual transactions into and out
of shop order WIP, in order to (among other things) maintain a balance
of parts charged into WIP, but we have difficulty comparing this book
balance to a stock record at month-end. This is a substantial asset, and
we need a way to reconcile its accuracy..
With parts inventory, the book balance can be compared to the
month-end by applying standard costs to the month-end inventory balance.
What methods are people using to generate the same sort of
comparison for WIP?
Dick Bailey
MCFA, Inc.
- Al Macintyre http://en.wikipedia.org/wiki/User:AlMac BPCS/400 Computer Janitor ... see http://radio.weblogs.com/0107846/stories/2002/11/08/bpcsDocSources.html
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