100% Sales Gross Margin Report

Hello everyone, I have been using Epicor for a few years and was more/less thrown into the project management role and responsible for accurate project job costs at time of shipment. Let it also be known that I am NOT a finance/accounting guy; I’m an engineer with a “money comes in, money goes out” knowledge of accounting. That being said, I can see accurate job costs through job tracker & the job’s production detail report. However, the SGM report (that I don’t have access to generate) shows a lot of our “projects” with zero costs & 100% GM. Can anyone help with this? I’ve seen several posts with similar questions and a lot of suggestions w/ accounting jargon. Below is some information about how the jobs are structured (hope it helps).

We use Avg. Costing for our products

We typically make products from jobs to inventory and then ship from inventory

For never-made before jobs, sometimes the labor & mtl estimates are zero (I’ve heard leaving these at zero will affect the SGM report; is this true??..I would assume the SGM report would look at actual costs vs actual payments/sales dollars)

Occasionally the ‘Qty Complete’ is at zero at time of shipment because someone didn’t log in to the last operation; I can see that being a reason behind the false reporting.

Accurate job/part costs are visible through: Job Tracker & the Production Detail Report
Zero dollar costs/100% margin values are being shown through: Part Advisor & the SGM report.

Anything anyone needs from me, please ask; I just want this resolved. Thanks in advance!

Ed

My first guess would be that jobs are being shipped prior to the materials being issued. Or that the job is for a qty more than is shipped.

The way the system works, when mtls or other cost are added to a job, they go into WIP. They are tracked by the associated job number. When the job is complete and recevied into to stock the costs associated with that job are used to determine the unit cost (total costs / qty). Since you use AVG costing, that calculated cost is combine with the current cost to determine a new cost.

If materials haven’t been issued to the Job prior to being received into stock, it would appear as though the job cost $0. This would then be the cost used when it is shipped. If the job has costs added to it after it is received to inventory, and is then closed, those costs related to the job are seen as a variance.

Here’s the Ideal flow

  1. Material issued to Job
    a. Costs go from Inventory to WIP
  2. Job marked as complete and closed
  3. Job gets received to Inventory
    a. Costs go from WIP to Inventory (or Finished Goods)
    b. Unit cost is updated
  4. Shipment from Inventory to Customer
    a. Costs go from Inv (or FG) to Cost of sales. This value is used for gross margin calcs.

If step 3 happens first, then the cost when it goes into stock is $0.

Another cause for a $0 cost is when only part of a job is received to inventory, prior to any Qty Completed being entered. Even if everything else is done correctly. For example

  1. A job for 10 pc’s whose BOM requires $20 worth of material is created.
  2. All Material to make all 10 pc’s is issued to the Job.
    a. WIP now has $200 of cost
  3. Five 5 are manufactured and received into stock - without any qty completed being reported.
    a. Those 5 go in at a cost of $0 each
    b. WIP still has $200 in it, and Inv has $0 (5 x $0)
  4. Three more are made and rcv’d to stock - without any qty completed being reported.
    a. Those 3 go in at a cost of $0 each
    b. WIP still has $200 in it, and Inv has $0 (8 x $0)
  5. The last 2 are made and rcv’d to stock - without any qty completed being reported.
    a. Those 2 go in at a cost of $100 each (the $200 in WIP / the qty 2)
    b. because AVG costing is used, the new unit cost is set to $20
    new cost =(8 x $0 + 2 x $100) / (8 + 2) = $20
    c. WIP now has $0 in it, and Inv has $200 (10 x $20)
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Thanks for the reply; I understand materials not being issued (that happens a lot here when we get busy; they wind up being issued after the fact and show up as WIP or a mfg variance). Our current process is to make a job for p/n XXX to inventory; the last operation is “pack”. Once the job is packed & rec’d to inventory, the job is Closed (as long as all of the costs have been pulled out of the job with the parts to inventory). The parts are pulled against a S.O. and shipped. I’ve attached some screenshots of a job that was made direct to a S.O. along with the Production Detail report, Part Advisor profitability results, and the Sales Gross Margin report.

Our head of finance hounds my boss (and he hounds me) every time the report runs and a 100% profit shows up; and I don’t have a good answer. Please let me know if anything looks off with the attachments.
Job Production Detail Report_565880.pdf (114.8 KB)

Apologies for the multiple replies (I can only submit 1 attachment per reply)

Sales Gross Margin Report.pdf (32.4 KB)

The job you show is make direct or ship from job. I am pretty sure that that does not pass thru inventory and does not update average costs. What does the average cost show on the cost tab of part tracker?

OK, so this report is coming from where? The stock Sales Gross Margin report or from a BAQ spreadsheet?

Your Profitability on the NRE (Non-Recurring Engineering) Fee for invoice 31712 is 35% which should show on the standard report.

BTW you are showing labor but no Burden (which in my opinion would be incorrect). The engineering department should have some burden rate as there is overhead. It was in the estimate, but the actual has none. This tells me that the labor
was reported in a different Resource Group than was set up, there is an error in the setup of the Resource Group the work was performed under or there was an error in the labor entry.

The Job Tracker shows a material not issued (DN214). If it was used, those costs will not be in the job costs.

As Calvin said, if you do a Manufacturing (Job) Receipt to inventory, all of those costs move to inventory. The costs mix with any existing inventory if a costing method of average is used. Thus the costs are from the existing inventory.

The demand appears to be a make to order. Had the item been shipped direct from the job instead of inventory, the actual costs would have been used on the invoice. Thus the SGA would be what the actual costs were.

Charlie Smith

CRS Consulting Svcs

(860) 919-1708

CTCharlie@outlook.com

Run PartTranHistory on ‘NRE Fees’ and see what cost was used for the MFG-CUS Tran with packer#31058

Hello Ed (and others),

I am working with a company on 10.2.300.4 and they are having the same problem as you. They are standard cost with a mix of build to stock and make direct. When they run the Sales Gross Margin report, they check the “Use Adjusted Cost” checkbox which will pull in Job Closing Costs rather than the Invoice Unit Cost once the job is closed.

In some cases, the report uses the Job Closing cost fields for Make Direct and on some it does not and shows 100%. I’ve tried to find a pattern, but whether it is non-stock or a part number that is non-stock, sometimes it works and sometimes it doesn’t.

We put a call into support, but no luck yet. I wrote a Sales gross margin query that will use the Job Closing costs when the SO line is make direct and the totals are correct. IMHO, it’s an Epicor issue that I’ve not been able to duplicate in the latest release on my demo laptop.

If you’ve figured anything out, please let us all know. Personally, I think the report is flawed since my query matches up to the correct totals after they go back to each of the zero cost lines and add in the job cost information.

Good luck…Thanks, John Gillenwater

i know this is an old thread, but we too have the same issues, we are on Kinetic and cloud based.

we are also on standard costings and were told to tick the use adjusted cost box and same as you, sometimes this report works and some times it does not.

i am trying to create a BAQ that will pull the costs from the job tracker > assembiles > costs screen but my knowledge is limited when it comes to SQL and writing BAQs

This thread had a baq in it that works for sgm.

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Are you running the WIP Recon or COS Post before the SGM report?

we have tried running one then the other and it doesnt report the correct figures.

the figures on the SGM report are different to those on the job tracker screen so i can’t rely on the data