Job scrap Value into finished goods

Kinetic ERP
1

Hi all,

We process a lot of coil which results in quite high volumes of scrap which we in our old system used to cost into the job.

For example we issue 1000kg of coil to a slitting job costing £1000.

We receipt back two lots of coil into stock of 400kg each - which should have a lot cost each of £400

However the balance of the coil (200kg @ £200) is scrap and so we would want each lot of finished product to be valued at £500 and not £400.

However, Epicor simply writes the £200 scrap to MFG-VAR

Has anyone encountered a similar issue or a way around the problem?

Any help greatly appreciated,

Luke

2

I could be wrong about this, so you may want to wait for others to chime in as well. But it sounds to me like you may not want to “scrap” anything.

When you scrap something, it takes the associated costs and separates them out into its own bucket. If those costs are still on the job (still in WIP) when it closes, those cost then go to MFG-VAR.

“Scrapping” parts from a job is (I think) meant for scrapping finished parts. One part/assembly failed during manufacturing, so you scrap it with a reason code, and it (along with its associated costs) can then go through a DMR/non-conformance process.

Instead, in the scenario you described, I would add a scrap factor to the operation. So if you you’re making your 2 coils @ 400kg finished weight, and know you need to issue 1000kg, you could add 100kg (per part) scrap factor. (or 25%). The system will then calculate that the job requires the 400 kg per part + the scrap factor of 25%… so you require 500kg per part, or 1000kg total.

The system doesn’t know you’re physically throwing away 200kg. It just thinks 1000kg is required to make the two finished parts.

You should then be able to receive the two finished parts into inventory and all costs (1000 kg’s worth) will be applied. You don’t NEED to scrap anything from the job.

… but again… I may be mis-thinking this, so, hopefully someone will come along and confirm.

3

Hi David,

Firstly, many thanks for taking the time to apply - it really is appreciated.
What you are saying makes total sense - However, with coil the amount of scrap on the job is not an exact science so it will vary every time the job is done, putting in a scrap % in advance of the job being complete is not really possible :frowning:

4

What @dcamlin said is correct. If you cannot put in a scrap quantity/percentage, I would just over-issue the amount required for the job and leave it at that.

3 Likes
5

yeah, just issue whatever material you need… you’ll have records of how much you issued and that material costs go onto the job.

Receive the finished parts into inventory… you don’t have to scrap anything… and all the issued material costs will be applied to those parts.

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6

Hmmm, the 1000kg has already been issued to the job though so cant over issue - the issue is you are only returning 800kg back to stock. The only way to get the system to pickup the extra cost would be to reduce the job prod qty to 800kg and then issue the 1000kg onto the job would it not?

7

You can always over-issue.

If I’m making a part and it “requires” 5 EA of a material. I can always issue 6, 7, 10, whatever. The Required quantity just helps MRP plan materials. But I can issue 500 if I want.

All the cost of those 500 parts hit the job cost and become part of the material costs of the finished parts I receive into inventory.

So, yes, in your scenario… your finished parts are 400kg each. So I would set up the job to “require” 400 each. But then go ahead and issue 1000kg.

If you don’t scrap anything, the cost of the 1000kg of material will go against those two finished parts.

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