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Evo-ERP and DBA Classic >> Accounting >> SO Total Costs
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Message started by fstickel on 06/24/08 at 14:14:45

Title: SO Total Costs
Post by fstickel on 06/24/08 at 14:14:45

We are a custom order job shop manufacturing company. Trying to find the total cost of an order. SA-B shows the COGS associated with the invoice of a SO for items listed on the SO taken directly out of inventory or built by WO. We have added costs of rebuilt components and freight/storage costs of components we would like to incorporate into the project costs. WO-H appears to allow us to put costs onto a job. Also, if the costs are learned after the SO is invoiced, we can open a new WO on the job and WO-H the costs in. But where do we look to see the profitability of these projects?

SA-B shows only profitability of the invoice. JC-R omits costs of items having type A or F items beneath the top level. JC-L lists all the costs as well as the rolled up costs so costs are double-counted and it doesn't add the costs. Labor is not an issue since I have created my own separate labor tracking system in MS Access that tells me that part of the cost.

Is there another job shop user out there who has found a way to extract accurate historical job costs from DBA?

Title: Re: SO Total Costs
Post by lmk223a on 06/26/08 at 12:37:43

Fellow Job Shopper:

Our company uses the work order as a collection bucket for the majority of the sales order costs. We may have more than one work order for a sales order when the customer requests various delivery dates to employ the Just in Time concept for material.

This practice allows us to use JC-A, Job Cost Report Summary, to show profitability for the work order(s). Extra costs (freight, import duties, etc), WO-H, are included here as part of the job cost. Our IS employee also created a Crystal Report for management to track rate of return which gets its info from JC-A, the crystal report just performs additional calculations for return rates.

Various items like outside set up, tooling and testing costs, paste stencils, etc. flow directly to COGS instead of the work order, but can be added manually to arrive at a total sales order cost. These items usually pertain to a customer's specific product and will benefit any work order created to manufacture this product over its life cycle.

Question - why do you create a new work order just to add in extra costs after the sales order has been invoiced? Extra costs can be entered at any time, they just won't pass thru to sales order and inventory costing if entered after the last shipment is made, but wil allow you to track profitability if maintained in the same sales order work order. Extra costs can also be billed to the customer separately as a noninventory part number - for example an expediting fee, paste stencil - we usually bill these extra costs with the first shipment, but can be probably be billed at any time.

Title: Re: SO Total Costs
Post by fstickel on 06/26/08 at 15:35:24

We use work orders primarily for items built in the shop. The top assemblies are typically listed on the sales order. N-type items such as outside services, freight, used components not inventoried get lost in the process unless I IN-K the Last Cost for the Item to get the cost listed on the Pre-Post Report. But even then the costs are not recorded as part of the total cost of the Sales Order. My understanding is the Pre-Post Report is not maintained in the system; its just a piece of paper.

I have been creating a new WO to add in the extra costs because all other WO are for A- or F- type items.

Does "added manually to arrive at a total sales order cost" mean you do a journal entry? Once the cost is in COGS, what is your journal entry to tag it to a sales order number?

Do you specify a WO on all your PO's to assure you capture all those costs under a sales order? I have discovered Purchasing has simply been putting the Sales Order number down as the Job Number when entering many PO's and not specifying a WO. When the PO's were closed, all the costs just went into WIP and were cleared to COGS when I adjusted the GL to match the control reports.

I haven't solved the multiple billing problem on a SO yet. We are paid by milestone billing, beginning with a down payment. I have just set up a shadow system in Excel to invoice for those payments and then invoice in DBA when all the costs are in and WO closed.

Title: Re: SO Total Costs
Post by lmk223a on 06/27/08 at 05:52:08

Extra costs can be posted to work orders to manufacture type A (subassembly) and F (finished goods) work orders and thereby, these extra costs become part of the WIP calculation when reporting finished production. In turn, it is these finished productions costs that pass through to the Sales Pre-Post Report (cost of goods sold) when the item ships. This info is more than just a piece of paper, because it is these figures that appear as Cost of Goods Sold in the Sales Journal.

Your extra costs of freight, warehousing, etc. can be added to the manufacturing work order and will appear as part of the WIP cost, and will be transferred as part of the inventory cost when reported to finished goods.

My statement to manually add extra costs refers to your data collection process of costs or tool for measuring sales profitability, such as an accounting spreadsheet. No, I do not perform a journal entry for these items.

Also, our purchasing agent uses the work order BOM when procuring material, and does list the work order numbers for each part number ordered. When a part is purchased for more than one work order, notations are made to show the distribution qtys. for each work order number, and the balance to stock. These aids in receiving material as this individual also performs the work order issue of material.

Title: Re: SO Total Costs
Post by fstickel on 06/27/08 at 09:56:49

My comment about the Sales Pre-Post report was meant to refer specifically to N-type items that appear on the Sales Order. When I post the invoice, the "cost" of the N-type item is pulled from whatever the last cost was, which is not necessarily the real cost. I have IN-K'd the real cost in before posting to make the pre-post report look better, but if by doing that I am forcing that amount into COGS, then it seems the N-type cost is being double-counted.

Does your purchasing agent always order off a BOM? Do you require a work order to always be specified on a PO?

Thanks for your advice on this. It really helps!

Title: Re: SO Total Costs
Post by cathyh on 06/27/08 at 10:27:17

We use a lot of "N" types.....

If you have your "N" types set up with your ASSET account and COGS the same account, the invoice post is a wash, no matter what $$ value it is. The cost of purchasing an item or finishing a WO for that item is already in COGS (because your asset account is your COGS account).
Changing the last cost before posting will make the profit report on a sale correct, which is why we also try to do this step before posting the sale of an "N" type that we make or a generic ''N' type that has many different costs when purchased.

Hope this helps in regards to "N" types!

Title: Re: SO Total Costs
Post by lmk223a on 06/27/08 at 11:26:47

fstickel wrote:

Updating your N cost is okay, and you are not double counting if your N cost originally went to GL expense account say 102, and at $10. When you update the N to COGS at $10, the offsetting entry is to reduce the balance of the expense account 102 by $10. So it is a wash among expense accounts, but transfers the cost to your sales order

Yes, purchasing always works off the specific work order BOM when procuring material and work order numbers are always listed 2 or 3 line of the part description on the PO. Even if it is a straight shot to the work order (JOB RECEIPT) we still list the work order number. It provides a good audit trail.
Suffice to say, being a job shop we try not to purchase more material than is required to satisify the customer's orders. The cost of carrying too much inventory is not a good idea.