When creating work orders, the system requires a vendor to complete the order. All vendors are valid, however, if you process any work order steps in-house, a vendor must be created for your company's service process. For example, you may send out products that need to be painted, but you assemble or cut products at your warehouse. Use a current vendor to enter the painting step on a work order, but create an internal vendor for the assembly step. Use Vendor Work Order Processing Maintenance to assign default values for the vendor's setup and process costs per process.
To create a vendor record for a service process:
From the Maintenance menu, select Vendor to display the Vendor Maintenance window.
Create a vendor record. If this is an internal vendor, in the Name field, enter a vendor that describes the internal process to perform, for example, Assembly Vendor - In House.
From the Orders menu, select Work Order Processing Maintenance to display the Vendor Work Order Processing Maintenance.
Complete any of the following fields, as needed, for each vendor process:
Note: Leave any field blank that has a value that changes depending on the type of material modified.
Column | Description |
Process | A description of the work to perform, such as Assembly or Painting. Select from the validated list. Setup your processes using the |
Days | The number of days required to complete the step. The default value is 2. |
Setup Cost | The costs incurred while processing the step. Examples |
Process Cost | The costs incurred during the process per specified unit of measure produced or generated. See the UM field on the Work Order Entry screen for the unit used to determine this amount. Examples |
UM | The proportions of a specific item as it is costed for processing. These values include:
|
Save the information and return to the Vendor Maintenance window.
From the Additional menu, select Additional Vendor Information to display the Additional Vendor Information window.
If you created an internal vendor, do the following:
In the Override G/L Account Number field, enter the override account number.
In the right-hand pane, select No Order Entry to make sure that other orders are not created with this vendor.
Note: Never assign an override G/L account number to an external vendor, as a payable is involved.
If prompted that no active branches or territories are assigned, select Yes to display the Accessible Branches window and assign branches and territories to the vendor.
For a step:
Setup Cost = $9
Process Cost = $2
UM = Lot
If we build a material using:
1EA Material1 > Cost $10
1EA Material2 > Cost $5
1EA Material3 > Cost $20
And it will generate 3 EA finished goods.
The calculated cost will be:
Cost Material1 x 1EA
+ Cost Material2 x 1EA
+ Cost Material3 x 1EA
+ Setup cost x 1 (because is the cost to build 1 UoM or 1 Lot)
+ Process cost x 1 (because the UoM is Lot, which means the whole 3 quantities)
For this example, the cost would be:
Cost of materials:
+10
+20
+5
Setup cost +9 x 1
Process cost +2 x 1
+35 + 9 + 2 = $46
It means the process cost will apply for each processed unit.
Setup cost = $9
Process cost = $2
UM = EA
Cost Material1 x 1EA
+ Cost Material2 x 1EA
+ Cost Material3 x 1EA
+ Setup Cost x 1 (because is the cost to build 1 UoM or 1 Lot)
+ Proc Cost x 3 (because the UoM is EA, and it generate 3EA)
For this example, the cost would be:
Cost of materials:
+10
+20
+5
Setup cost +9 x 1
Process cost +2 x 3
+35 + 9 + 6 = $50
For the UM = C and M, the cost calculation is proportional to the UoM.
For instance,
having Processing quantityy = 275 with UM = C
What the system does is divide 275 by 100, then multiply the result for the processing cost.
Having a processing cost = $2
275 / 100 = 2.75 x 2 = $5.5
This is exactly the same, except that the UM = C.
It means the process cost will apply proportionally for each 100 processed units.
Setup cost = $9
Process Cost $2
UM = C
Cost Material1 x 1EA
+ Cost Material2 x 1EA
+ Cost Material3 x 1EA
+ Setup cost x 1 (because is the cost to build 1 UoM or 1 Lot)
+ Proc cost x ( 3EA / 100) (because the UoM is C, it was not able to generate 100)
For this example, the cost would be:
Cost of materials:
+10
+20
+5
Setup cost +9 x 1
Process cost +2 x 0.03
+35 + 9 + 0.06 = $44.06
This is exactly the same, except that the UM = C.
It means the process cost will apply for each 100 processed units.
The output of the process will be to create 250 finished good pieces (EA).
Setup cost = $9
Process Cost $2
UM = C
Quantity to be produced = 250 EA
Cost Material1 x 250 EA
+ Cost Material2 x 250 EA
+ Cost Material3 x 250 EA
+ Setup Cost x 1 (because is the cost to build 1 UoM or 1 Lot)
+ Proc Cost x 2.5 (because the UoM is C, and 250 is 2.5X proportional 100EA)
For this example, the cost would be:
Cost of materials:
+10 x 250 = 2500
+20 x 250 = 5000
+5 x 250 = 1250
Setup cost + 9 x 1
Process cost + 2 x 2.5
+2500+5000+1250 + 9 + 5 = $8764
The same logic will apply for M, it will count the cost for each 1000 units generated.
If we configure that the UM = M, and the finished goods quantity is 9999 EA, it means we have 9.999 times the 1000EA.
The Process cost will be:
+ Process cost x 9.999 (because the UoM is M, and 9999 is 9.999 proportional
to 1000EA)
Supposing the same input as 250EA with 9999EA as output, the cost will be:
Cost of materials:
+10 x 250 = 2500
+20 x 250 = 5000
+5 x 250 = 1250
Setup cost + 9 x 1
Process cost + 2 x 9.999
+2500+5000+1250 + 9 + 19.998 = $8750 + 9 + 19.998 = 8,778.998
If for this output 9999EA, we have configured the UM = C, it means 9999EA is proportional by 99.99x to 1000EA.
The Processing cost will be:
+ Process cost x 99.99 (because the UoM is C, and it is 99.99x proportional to
100EA)
The cost will be:
Cost of materials:
+10 x 250 = 2500
+20 x 250 = 5000
+5 x 250 = 1250
Setup cost + 9 x 1
Process cost + 2 x 99.99
+2500+5000+1250 + 9 + 199.98 = $8750 + 9 + 199.98 = 8,958.98
See Also: