In this Document

APPLIES TO:

GOAL

On : 12.1.2 version, WIP Costing

An Inventory Item exists in Inventory Organization and has FIFO layer cost. The item uses both asset and non-asset subinventories. 
We allow transfers from asset to non-asset for select individuals. 

When receiving inventory items into the non-asset subinventories, the value is 0 (as expected). 
When transfer, issue, receive or ship these inventory items to or from this non-asset subinventory the distribution is 0 (again, as expected).

However, when performing a WIP Material Transaction and issue these inventory items to standard WIP job from a non-asset subinventory, a distribution is created equal to the layer cost of the item. Since these items reside in the non-asset subinventory and they are issued to an WIP job, shouldn't the distribution for this transaction be 0? Or no distribution at all or as similar to subinventory transfer.
 

SOLUTION

Development suggests that you utilize the SLA setups to get the scenario you need.

Or

a) Don't issue the assembly to the job and don't complete the the assembly from the job. Just do the transaction which remain in the job and go to variance.

b) Issue the assembly but define no standard requirements for the job. When completing the assembly it gets costed at the current cost. If we don't do this then the assembly issued to the job would not get relieved .

Customer created non asset items to issue to work order and track in non asset subinventory

Note:

- For an EAM job if asset & rebuildable item is issued from an expense sub inventory and if "Value Rebuildables At Zero Cost" flag is checked then the accounting will happen at 0 value. If it is unchecked it will happen with item cost.
- If the item is purchased item then definitely it will use the item cost only.

In costing the cost are maintained at the inventory organization level but not the sub inventory level.
Thus take the example of the below case, suppose "I1" is your asset item. Initially when you create the item the cost for the item is 0.(This is at organization level and not the sub inventory level)

Item Cost Organization
I1 0 O1

1. Initially a misc receipt to sub inventory SUB1 (Expense SI) took place, but the transactions cost is 0. Thus there is no change in cost and even after this transaction you see the the same 0 in the cost value.

Item Cost Organization
I1 0 O1

2. Now a WIP Issue is made, here as it is purchased item it will look into the cost of the item to do the accounting but as the cost is still 0 accounting happens at 0 value.

3. Now a PO receipt is done to sub inventory "SUB2" (Asset SI), this is a cost own transaction to asset SI and thus the cost of the item is changed to 10 (for example. Thus the new cost of the item in the organization is having the value.

Item Cost Organization
I1 10 O1

4. So now if a WIP Issue is made to the job as the job is not an expense job, it will definitely get costed using the Item Cost in the organization.Ie. WIP issue accounting will happen at the cost of 10 only.

- Please use expense job for your desired behaviors.  Alternatively, right before you transfer all the quantity from asset sub to non-asset sub, you can explicitly perform an average cost update transaction to make the item's cost to be zero by using non-asset sub's expense account as the adjustment account.