Finished Production Order Unit Cost Calculation

Sivaibiz

Hi,

I am working on Version AP 4.0 SP1
Costing Method is FIFO

I have a problem, my Finished Production Order is not getting updated the with the unit cost.

Here are the steps that I follow:

My Bill of material for the finished Item “ItemF” are as follows,
1. Item A = $10 (Unit Cost)
2. Item B = $10 (Unit Cost)

My Routing for finished Item “ItemF” are as follows,
1. Machine A = $0 (Unit Cost for 1 hour run time.)


a. I have created a Released production Order for the “ItemF” - qty is 2 nos.
b. I didn’t post any consumption journal for this production order.
c. I post only the Output journal for 3 quantities for the ‘Machine A’ with zero cost.
d. And I converted the Released production Order to Finished production order.

The Value entry is updated as follows.
Cost Amount (Expected) = $20
Cost Amount (Actual) = 0
Item Ledger Entry Quantity = 2
Valued Quantity = 2
Invoiced Quantity = 0
Cost per Unit = 0

Now the cost exist on “Cost amount(Expected)”, Even after I run the “ Adjust cost job” also the cost is not rolled out into “Cost amount actual”.

I'd like to add more about the unit calculation as far as I know , the unit cost calculation as follows,

Capacity cost = setup time/unit cost * run time + run time * unit cost
Material cost = Consumption Qty X unit cost

Production Order Unit cost calculation = Capacity cost + Material cost / Output Quantity.


In our example the
Capacity cost = 0
Material Cost = 0

My question is

1. Can I finish the production order with capacity cost Zero and Without consumption.
2. What to do To convert the “Cost amount(Expected)” in to “Cost amount(Actual)”.
3. What is the Unit cost calculation for finished Production Order.

Pl Help

mahadule

Hi,

Answer for your point 1: If you have selected material Flushing method "Manual" than system will allow to finish the production order without consumption. Please check your Flushing method.

Answer for your point 2: Please check your Inventory setup for "Automatic Cost Posting" should be YES and "Automatic Cost Adjustment" should be ALWAYS. Than only system will update Cost Amount Actual.

Answer for your point 3: Unit Cost Calculation Actual and Expected

Finished Item Cost (Actual Cost) = Material Cost (Actual) + Manufacturing Cost (Actual)

Material Cost (Actaul) = Consumption QTY (Actual in consumption Journal) * UNIT COST of Raw material
MFG Cost (Actual) = Setup time + Actual Run time (output Journal) * unit cost from Machine centre card OR Unit cost from Routing line.

Finished Item Cost (Expected) = Material Cost (Expected from Bill of Material "QTY PER") + Manufacturing Cost (Expected)

Material Cost (Expected) = Consumption QTY (as per BOM per qty) * UNIT COST of Raw material
MFG Cost (Expected) = Setup time + Run time (from Routing lines) * unit cost from Machine centre card OR Unit cost from Routing line.

Please check the suggestted points.

Thanks

Navin Mahadule

chengalasettyvsrao

mahadule wrote:

Answer for your point 2: Please check your Inventory setup for "Automatic Cost Posting" should be YES and "Automatic Cost Adjustment" should be ALWAYS. Than only system will update Cost Amount Actual.

Just some additional suggestion.

If Automatic Cost Adjustment is turn on , you will have a performance issue. I suggest uncheck the settings of Automatic Cost Adjustment and run the batch jobs overnight for performance reasons . If you want to run Cost Adjustment automatically you will need to schedule it via Job Queue .