We’re having a problem with Cost of Goods Sold not being updated when we make a partial shipment on a job. We do update the job when a shipment is made and can see it in our production detail but it appears that the costs remain inside the WIP until the final release on the job.
This makes the first release, or more, look too good and the last release look like absolute trash.
Any ideas on how to fix this?
We’ve seen this too when completed assy’s are not reported.
We see this too when receiving a partial job to inventory. It goes in at not cost. Then when the last of the job’s prod qty is received, it goes in at an elevated cost.
Example:
That’s exactly what we’re seeing here but ours are not being produced for stock. Also, If an employee doesn’t report a quantity, as soon as the next operation starts the production admin account adds the quantity to the inaccurate operation.
Our parts are using Standard costing and being “Made To Order”. Although I did notice that most of our parts are not using “Backflush” under Part Maintenance>Part>Sites>Detail
I really don’t want to go changing things around and end up with an even worse problem but could that be our issue?
Hello Justin,
If you are using standard cost, the part transaction history for that part would show the standard cost going to COGS for the quantity you partial shipped. Any difference (variance) would not be recognized until the job is closed. So I’m a bit confused by what you mean by the last three looking terrible and the first two looking good. Am I missing something?
Hi John! Thank you for the response.
Unfortunately that’s not happening and you have it backwards. The first shipments look great with no costs and high margins but the last shipment has all the costs assigned to it and looks terrible.
Example:
We have a job for 30 pieces that cost $10/each to make.
We ship 10 from the WIP and nothing gets assigned to COGS.
We ship another 10. Still nothing.
We ship the last 10 and that shipment gets hit with the full cost of all 30 pieces because we closed the job.
So the last shipment appears to be 10 pieces shipped at a cost of $30 each.
Instead of being $100+$100+($100+variance), it’s $0+$0+($300+variance)
This appears to only be happening to some jobs. Not all of them.
This is a nightmare for our accountants because we ship, on average, about $88,000/day.
Hope this clarifies my problem a little better.
Hello Justin,
Are you sure the finished good is set to standard cost and there is in fact a standard cost associated with it?
Does the cost adjustment screen for the finished good show a standard cost?
What report are you referring to that is showing your cost of goods sold?
Is this a standard report and do the values match your part transaction history cost entries for the shipments? The part transaction history info is critical here in figuring out what’s happening.
There’s something in either your setup or your process that is causing your issues, but without more info, it’s hard to know.
I’ve been down this road a bunch of times, but I’m sure you’ll find the cause.
If you don’t find the answer, I’ll be around next week if you want to do a quick webex so I can take a look (no charge). But right now, I have to get going.
Good luck,
John Gillenwater
918-369-9085 office
918-671-9719 cell
John,
It’s closing time here so I’ll look into it Monday and give you an update.
I’d really appreciate any help you could give us and, hopefully, I can get you some more answers come Monday.
-Justin
John - how does Standard costing work for Make to Order parts? Is the MOM’s expected cost used?
Hello Calvin,
I am going to do some quick testing to verify how standard costs work on MTO this weekend to make sure Epicor works like I would think it should when parts are either shipped in full or partial quantities from the job.
Most of the companies I work with use average cost for MTO, so I want to be sure standard cost MTO works the same as MTS.
But to answer your question, the standard cost for any part is calculated with a cost roll up. You can always manually enter the standard cost buckets via cost adjustment too if you know what they are. If you have setup costs, you need to make sure your costing lot size is set to spread out those costs.
One other note, standard costs are never automatically updated. In other words, if the MOM changes, the standard cost will not without another cost rollup.
The estimated cost for a job is always the current MOM costs and can be different than the standard. Hope that all makes sense.
I guess my real question was how does a “part” that doesn’t have a Part master entry have a standard cost?
Doesn’t cost roll-up only pertain to parts that are in the part master and have a BOM?
We use AVG costing, so this is more just to satisfy my curiosity/education. So don’t kill yourself.
Hello Calvin,
If there’s no part master, (on the fly), the standard cost is the same as the job estimated cost which as you know is based on what labor and materials, etc were added to the job.
We usually track the as quoted vs as estimated (as engineered) vs actual costs in those environments.
No, the final cost on a finished good is being pulled from the BOM. It rolls the cost of all sub-assemblies up to generate final cost. At least this is what I’m being told and how I’m understanding it. Perhaps this setup is part of the issue?
No
Gross Margin Report and Income Statement (they differ by a large amount and that’s another issue we’re trying to fix)
Honestly, I wasn’t here when the company setup Epicor and I’m learning as I go. The Gross Margin is exported out as a CSV file using Standard-SRSS. The columns are totaled and then we calculate the overall GM for the months, or jobs, we want. It looks pretty standard to me.
Is there a way to display a list of jobs that had partial shipments? I’m having a heck of a time trying to hunt one down to get screenshots or more details to answer your last question. Most jobs are shipped as a whole but we even have issues with that sometimes.
I noticed yesterday we had a job ship while it was still open and the subcontract cost wasn’t assigned to it yet. The finished product did not have any standards set in the cost adjustment screen. I’m being told that a job can’t be shipped unless it’s open. What I would like to see is all associated costs being applied to the job and sub-assemblies as soon as any amount of goods are shipped and those costs be reflected inside the COGS for said amount.
Sorry, I’m new at Epicor and my learning curve is very steep right now. So, please bear with me.
UPDATE: Okay, so the SubContract Operation wasn’t marked as complete and that’s why the cost wasn’t being applied to the job. Most of our standard costs are applied at the operation and sub-assembly level. Is there a way to force operations to complete, with standard costs that are associated with them to be applied, when a shipment is made?
Also, how can a job be shipped when there are still pending operations associated to it? That doesn’t make sense to me.
Hello Justin,
There’s a number of issues at play here.
First of all, if there is no standard cost showing up on the Cost Adjustment screen for the finished good, then you are not correctly using standard cost. Your response is correct in part, but you have to do a standard cost rollup first before the part is updated with the cumulative costs. It’s possible the parts you are referring to have not had their costs rolled up yet.
In the Part/Sites tab, you will see a costing method for the finished good for each site in your company. I asked if that value was set to “Standard” or something else. This is a key question.
As an FYI, I also tested MTO standard cost items several ways and each time it costed partial shipments from a job correctly at the standard cost times the partial quantity.
The best way to get a list of job with partial receipts is to write a quick query against the Jobprod table where Job is Not Closed and ProdQty – QuantityShipped > 0. Those aren’t the exact field names, but the fields are in that table.
Do you know what your monthly manufacturing variance amount has been? Your accounting department should know this. I’m not sure how many product GL controls you are using but the Variance typically is it’s own account.
Thanks,
John Gillenwater
This makes sense and I’ve been questioning this since last week. Good to know! Thank you!
Yes, they are set to standard. This I have checked on multiple parts.
It’s been all over the place.
January: -11,430.80
February: -10,406.31
March: 28,262.34
April: -15,110.64
May: -5,626.78
June: 24,076.15
July: 18,765.69
UPDATE: I found a couple parts that have costs listed on the Cost Adjustment screen but are under Average/Lot, not Standard… but the part is set to use standard costing? This doesn’t seem right to me.
when you say “at the standard cost times…” you mean the estimated costed on the MOM? Or the actual costs issued to the job so far?
Sample Job:
Assume the following sequence:
What cost is used for those 5?
My experience is that it would be $0 for those 5, and $90 for the remaining 5 (when the eventually ship). If there were 3 shipments of 5, 4, and 1, the first two would have zero cost, and the last would be for $90
Hello Justin,
Here’s what I recommend you folks do to see what’s going on for your issues.
Review your Inv/WIP recon report to make sure the sum of the gross margin report total for COGS accounts (not incl. Variance accts) equals the Sales Gross Margin (AR/Reports) totals for the month. This is a high level check against your GL controls.
Write a query for each manufactured part that pulls the cost method from the PartPlant (Part Site) table and also pulls in the standard costs for the appropriate PartCost records. (If you only have one cost ID, then this is easy, otherwise, you need to make sure you are using the correct Cost ID in the query). This will show any parts with no standard or missing standard costs.
Write a job variance dashboard that lets you select closed jobs by date range closed. Compare the PartCost Standard cost to the Job Cost (JobAssembly) cost for each cost bucket and show total. This will let you find parts that are likely have either missing or outdated standard costs. This dashboard can also be used on a monthly basis to identify closed jobs with excessive variances.
This should help you find the root cause of your issues.
Thanks,
John Gillenwater
Hello Calvin,
In your example, the cost for the five finished goods shipped from the job is (5 x (the standard cost of the finished part, assuming the finished good is set to Standard costing)). At the end of the job, when you close it, any balance left in WIP, positive or negative, goes to the mfg variance account.
Looking at your last several months variance, you were both positive and negative for the some of the periods. In other words, the negative variance balance amounts mean for the month, your job actual costs were less than the parts shipped times their standard cost AND the positive balance means the opposite – Job Actuals were greater than the parts shipped times the standard cost. The goal is to have zero variance for all jobs and the end of the month or at least a very small percentage of your total.
Also, Epicor calculates average and last cost for all parts automatically and if you are using standard costing, the average and last costs are for reporting and comparison purposes only.
Your statement that you would see the first partial shipment of 5 makes sense since the finished good probably doesn’t have a standard cost, but your next statement that the last five have a cost of $90 is incorrect. The job cost is $90, but the part standard cost that goes to the COGS account is based on the standard cost.
Hope that helps.
Thanks,
John Gillenwater
John - the main point of the OP is that doing a partial shipment of a job, temporarily throws things off.
I actually ran the example I made above (with the exception of the cost of the stocked part, in the MOM)
I do not see anything hit COS, until after the rest of the job ships (and is invoiced)
WIP RECON after the first 5 were shipped, invoiced and Capture COS/WIP was run:
Notice there is no entry for COS
.
.
.
After the remaining 5 from the job are shipped, invoiced, and Cap COS/WIP was run:
There is now a COS for the entire Job Qty
If that second shipment never happened, or only 4 of the remaining 5 were shipped (and the Job remained open), the COS would have been orphaned in the WIP account.
Hello Calvin,
Please send me a screenshot of the part transaction history for the finished good that covers all these transactions.
If possible, try to include the total cost column along with the initial columns. I need to see your transaction types.
You can send this directly to john.gillenwater@yahoo.com if you want.
Thanks,
John Gillenwater
