We don’t use any of the labor or operation aspects of the MOMs. Just Materials. So we don’t enter any labor/time info (or qty completed) for jobs. If it is a Inventory Demand link, we receive it into stock. If it is make direct, we ship it from WIP.
So needless to say, we haven’t been closing jobs. If we use Job Closing we get a warning:
Is this a warning because something “bad” might happen by closing a Job without entering Qty Completed?
Or is it just a friendly reminder that the job might not actually be finished?
We want to close them out so that materials that weren’t issued to the job don’t keep showing up on the PO Suggestions.
It’s just a friendly reminder as far as i could tell.
if the labor qty on the last operation of the job does NOT equal job production qty, then you get this warning.
I am not sure where this labor qty would impact except for maybe scheduling? I did not see any financial impact.
The only area where i saw it as a problem was if the part was a serialized part where you have to assign serial number(s) to the job. Then, Epicor will not let you close the job until last operation qty on job is same as production qty and same qty of serial numbers assigned.
Other than that, we always have discrepancy between labor qty report and production qty in our facility because multiple people could work on the same operation and report qty by accident or not report any qty at all. I do fix then via labor entry before closing the job but that’s just for making it look clean and not for any financial impact reasons.
In our system, if the quantity completed is 0, when you do a receipt to inventory the cost of inventory is set at $0.00. Then if you close the job the entire cost of the job goes to COGS variance.
So we added a hard stop to not allow the quantity received to exceed the completed quantity. This minimizes job cost variances.
Must be some system setup then?. Because i have not see out inventory being valued @$0 when we do a MFG-STK transaction even if the “completed” qty is 0, which it is always off for us and i fix it after the job receipt was already done. But if i look at part transaction history, then it was costed correctly. The “completed” qty on the job tracker is really what the qty we entered on the last operation of the job via labor entry.
We’re using standard costing system.
When we do a MFG-STK transaction, it’s using the std cost x transacted qty (qty received to stock). So the completed qty does NOT come into play here.
The “Actual Cost” is the cost of all the materials issued to job and actual labor/burden cost (employee rate x actual hrs worked). I dont see the completed qty have any effect here either.
If you’re looking at the SSRS production detail report, then i see the report using Completed qty to calculate Unit cost (Actual total cost / Completed Qty). I consider that a report issue rather than GL transaction.
Al - We’ve discovered that the unit cost updates as $0.00 only when the Qty Received to stock is less than the production qty. Take this job for 10 EA to stock, that was received as 5 EA, two separate times.
The total cost for parts, for all 10, was $3,110 ( a unit cost of $311). The first receipt went in with zero cost, the second went in with cost of $622.
The value of inventory is maintained, as those 10 pieces (5 at $0 + 5 at $622) net to $311 each.
BUT!!!
If you do any transactions (like shipments or Transfer orders) between the first and second receipts, those trans will use an incorrect number.
My original concern is about closing jobs that have had all materials issued, all receipts to stock, and all shipments completed, but with no qty completed reported.
Just out of curiousity, what costing method are you using?
Also, if you look at part transaction history in epicor for that part you made on the job, does the 1st receipt (which had $0 on the report) show $0 on the part transaction history also?
On the part transaction history, was the cost updated or loaded after 01/05/2018?
I tried to simulate a job where the job production qty was for 32 pcs. In piecemeal we received in 19 qty so far, but all of them had costs. There is still 13 pcs open but all the previous receipts were costed.
It seems like the weighted averaging is working except for the MFG-STK transaction that happened on 01/05/2018 which totally messed up your avg cost.
Before i raise the white flag and give up, is it possible to check when the components to the job were issued? If the components were not issued till after 01/05/2018, then that explains why the avg’ing was off.
01/4/18 : On Hand = 2@$151.65 = $303.65
01/5/18 : STk-CUS = -1@$151.65 = ($151.65)
New QOH Balance = 1@$151.65 = $151.65
01/05/18 : MFG-STK = 5@$0 = $0 (was materials issued to job at this point? or was it done after the job receipt?
New QOH Unit cost = (1@$151.65 + 5@$0)/ 6 QOH = $25.27 new unit cost
Ok, this makes sense, but one question/issue:
So what if the Prod Qty = 10 with say 3 operations with the following labor reporting:
Op 10: Qty = 10
Op 20: Qty = 4 NC Qty = 6
Op 30: Qty = 4
All operations were marked as complete
All operation labor entries were completed before the Mfg Receipt.
The 6 that went to inspection were failed and DMR Rejected.
When the 4 were rec’d to stock that transaction posted with $0 cost.
There is nothing else left to receive due to the bad parts that went into the assembly and those parts were purchase direct.
Also there is no longer a need for the parts, the 4 that were made is all that is now needed.
We posted Cost Adjustments to deal with the issue, but is there a better way Epicor could handle this?
Could ‘Production Yield’ being enabled and setup help with this?
We dont enter or track labor, But I guess a similar issue would happen. I.E. - costs are added to a job, but Qty Produced is less than Job total.
If I’m understanding your example, the qty’s of Op 10 and Op 20 are just internal to the job. And not until the 4 that passed Op 30 are received to Stock, does the issue arise.
I’m pretty sure that closing the Job will “flush” the remainiing costs in WIP. But they are applied to variance account, instead of inventory value or COGS
instead, they got tired of jobs showing on their open WIP report, so they modified the report to “hide” the unneeded jobs.
several years later, I had my first visit with the customer, and one general accountant asked me about the balance in their wip report not matching the GL… it was off by about $8,000,000.
While digging, i found the problem, realized what they had done… now to fix it we had to properly close the jobs. In doing so, the $8,000,000 was going to be written off to variance.
THAT EVENING there was a regularly schedule Board Meeting for the company. The CEO Panicked and asked me “What do we do… we can’t writeoff 8 million $ in one quarter… that wipes out the profits for the past 2 years.”
Turns out that the 8 million was all in a phony WIP dollars that they thought they had, and nobody had ever noticed it. it was now year end, and the light was beaming on their error.
CEO was no longer CEO within a few days.
Lessons Learned: ALWAYS close your jobs when complete. Don’t modify the report to hide Unnecessary data… look into why it is showing.
Yes! This is why ‘reporting’ is such a sensitive role. Anyone can make the numbers say whatever they want. The reporting needs to always be a reflection of reality to remove as much interpretation as possible.
Thanks for the story @timshuwy!
copy LIVE to a TEST area… then do the following in TEST.
Do a full Wip Cost Capture (to make the next step clean)
Close the jobs
Do another full Wip Cost Capture. This will show you the Journal Entries that will be made.
Now, you will be able to predict what will happen with your cleanup. You can then proceed with doing this in live (if you decide that is the best process).
