We accidentally stumbled into a discovery this week – several methods that didn’t have a Prod Std. time populated on at least one operation. The other discovery is that if that’s the case - then no labor or burden costs will be applied to that operation. So now that we know that - we’ve run a BAQ to give us all of the part numbers with this issue so that we can get that corrected. That’s the easy part!
My challenge is getting those costs accounted for on jobs at least back to the beginning of 2024. Of course the jobs in question are all closed. My questions are :
Can I re-open the job and add the labor & burden in the correct financial period?
Is that going to create another set of issues from a financial standpoint?
Assuming that the answer to 1 is Yes and 2 is No … AND we use AVG costing - would the average cost of that part update automatically based on the labor and burden costs added?
Not if you already ran the wip capture. You can use job cost adjustment. I don’t think its going to fix your part costs after the fact though, you would have to test that.
So if WIP capture is already done, I won’t be able to update in the correct financial period when the job was done? That makes sense I guess.
If trying to get the costs onto each individual job isn’t feasible, then maybe a journal entry to post a lump sum for 2024? We haven’t yet closed out our books for 2024 and I want to make sure the financials are accurate before the accountants prepare our tax returns.
If the financial period you want to add the labor and burden in is open (periods are open and Earliest Apply Date is set appropriately) and you have the blessing from Finance, Epicor will allow you to reopen the job and enter job cost adjustments or labor entries to add that labor and burden cost to WIP. However, when you close the job again that cost will end up flushing to Manufacturing Variance since the parts were already received to inventory at the lower cost.
The average cost will not change unless you receive the parts to stock from the job, which would mean essentially reversing all transactions since this started…
I think the way our Finance team would handle a situation like this would be to calculate the updated unit cost for each part produced in 2024, then entering cost adjustments as of 12/31/24 to update the average costs. That would handle correctly accounting for anything you had in stock as of the end of the year.
To account for parts you shipped, they would take all shipments for those parts and calculate the updated COGS Labor and COGS Burden costs and use journal entries against Applied Labor and Applied Overhead, respectively, to recognize the additional cost from selling those parts with the higher labor and burden costs.
Finally, any jobs that were still open WIP as of 12/31 would need adjustments entered, but I think our team would just enter journal entries for 12/31 to increase WIP by the correct amounts rather than trying to backdate transactions.
You can get the costs into the correct job and even the “correct” period if that’s what you really want to do, but…
Any costs recorded after re-opening the job will flush through as manufacturing variance. Since you have already shipped and/or received the manufactured goods, there isn’t really anywhere for the added costs to go so it goes to variance.
@tsmith - I especially appreciate the input of how finance would likely handle the sitch! I’m going with this option; there are several things on my “never to do list” and reversing a boat load of transactions is at the top!