Hi. Yes, Epicor advised that it was working as expected (Production Activity (Not MES) doesn't work as advised - #3 by tmat)
As we have quite a few backflushed operations too I have raised an Idea to request this to be fixed. For now though I have added it to my project list to look at creating a BPM that will add backflushed LaborDtl records to the count (Log In - Epicor Identity). Not sure when I’ll get to start looking at it yet though.