Auto-Reconciling Work Orders

In order to balance your general ledger, you must reconcile work orders. Reconciling makes sure that you have accounted for all your costs within the steps or quantities and that those costs have been applied and accounted for by receiving the finished good into inventory.

We recommend using an auto-reconcile, however if you do not have auto-reconciling turned on you can still reconcile a work order by overriding the cost values with manually calculated costs.

Before setting up auto-reconciliation for your work orders, you should review the following:

• Reconciling by Step

• Reconciling by In/Out Quantities

• Processing Costs and Units of Measure

To setup auto-reconciliation:

1. From the System > System Files menu, select Control Maintenance.

2. In the Keyword field, enter auto reconcile and press Enter.

3. Double-click Auto Reconcile Work Orders.

Note:SelectOffto turn auto-reconciling functionality off.

4. Select By Step or By In/Out Grouping and click Save.

5. In the Keyword field, enter method for calculating and press Enter.

6. Double-click Method For Calculating Process Qty For Work Orders.

7. Select Out of Stock or In to Stock and click Save.

Examples of reconciling by step and by group are provided below.

Note: If you want the system to record the process cost for each step when backordering work orders, you must select this option and set the Auto Reconcile Work Orders control maintenance record to by Step.

Reconciling By Step

To reconcile By Step, the system takes all the steps and adds up all costs from those steps to calculate the finished good cost. Users usually select to reconcile By Step if they have one batch of finished material coming in and the work order has one or multiple steps to complete that finished material.

Reconciling by In/Out Quantities

To reconcile By In/Out Quantities, for every finished good there are associated outgoing material costs. This situation requires the user to enter component material directly before the finished good material with which it is associated. You can have multiple groupings of finished goods. Users usually select to reconcile By In/Out Quantities when multiple finished goods are coming into stock with separate components for each finished good. This reconcile can also can be done across a single or multiple steps.

Note: If you plan to use auto reconcile once you have created the template to get the cost of the finished product going back into stock, we recommend that you select by In/Out Grouping and have the system do it for you when you escape out of the Material Details window.

Processing Costs and Units of Measure

When you create a work order, the system associates costs with the work order based on values entered in the Process Cost and UM fields in the Process Information area and determines how to distribute the cost. You can set default values for these fields through the Work Order Processing settings in Vendor Maintenance.

You can change the values in these two fields for a work order, if necessary, to override the original settings. The system multiplies the process quantity by the processing cost to get a total dollar value. Then, the UM field value determines how the processing cost is divided across the incoming and outgoing quantities of the work order.

By default, the system uses the values entered in the Method For Calculating Process Qty For Work Orderscontrol maintenance record: Out of Stock or In to Stock to determine whether the incoming or outgoing quantities have these processing costs associated with them. Most users, set this control maintenance record to In to Stock and use the finished goods to calculate the process quantity.

Example 1: Reconciling By Step

A two-step work order with two components will be painted. In step 2, the step 1 materials are combined with components 3 and 4 from step 2 to created Finished Goods Product 1. You have the Method For Calculating Process Qty For Work Orderscontrol maintenance record set to In to Stock.

Step 1: Painting

Setup Costs: $5.00

Processing Costs with Process Unit of Measure set to each: $2.00.

Step 2: Assembly

Setup Costs: $2.00

Process Costs with Process Unit of Measure set to each: $5.40

Finished Good

Break Down

The finished goods material unit cost of $25.90 breaks down as follows:

$17.00 = Material Cost from all steps $34.00 / 2 Finished Goods Quantity

$ 3.50  = Set Up Costs from both steps$  7.00 / 2 Finished Goods Quantity

$ 0.00  = Process Costs from step 1 is 0 because there is no incoming on step

$ 5.40  = Process Costs from step 2 is $5.40 ea based on Process UM

$25.90/ea = TOTAL Costs

Example 2: Reconciling By Quantities

A two-step work order with two separate finished goods produced. All outgoing component material prior to Finished Goods 1 (Component material 1 and 2) gets calculated to its cost.  Components 3 and 4 calculate into WO Finished Good 1. You have the Method For Calculating Process Qty For Work Orderscontrol maintenance record set to In to Stock.

Step 1: Painting

Setup Costs: $5.00

Processing Costs with Process Unit of Measure set to each: $0.50.

Step 2: Assembly

Setup Costs: $2.00

Process Costs with Process Unit of Measure set to each: $5.40

Break Down

Step 1:

$22.00 = Material Cost from prior to Finished Good 1 is $22.00 (10.00 + 12.00)

$22.00 / 1 Finished Good Quantity

$5.00 = Set Up Costs from Step 1  $  5.00 / 1 Finished Goods Quantity

$0.50 = Process Costs from step 1 is .50 * in coming material quantity (1)

$27.50/ea = TOTAL Costs

Step 2:

$6.00 = Material Cost from prior to finished good 2 is $12.00 (4.00 + 8.00)

$12.00 / 2 Finished Good Qty  

$1.00 = Set Up Costs from Step 2  $  2.00 / 2 Finished Goods Quantity   

$0.40 = Process Costs from step 2 is .40 * in coming material quantity (2) .80 / 2 Finished goods quantity

$7.40/ea = TOTAL Costs