In this Document

APPLIES TO:

GOAL

Q1: How can non-standard jobs (for repair/rework) be removed from the cost calculation engine so that these "unreal low cost" of the non-standard jobs of the assemblies will not dilute the Weighted Average Cost of the assemblies?

The repair/rework Work In Process (WIP) jobs for the assemblies cannot always reflect the real cost of the assemblies. Sometimes there is $0 cost because the setup the job was not completed properly. The major issue is Weighted Average Cost of these assemblies is being diluted by these non-standard WIP jobs. 

Scenario I:
1. Create an non-standard job for an assembly at WIP> Discrete > Discrete Jobs
2. Do not define required component or operations for the repair WIP job.
3. Complete the job at WIP > Material Transactions > Completion Transactions
4. The cost on the WIP job assembly is $0.
5. The Weighted Average Cost of the assembly is being diluted by these non-standard jobs.

Scenario II:
1. Create an non-standard job for an assembly at WIP> Discrete > Discrete Jobs
2. Define required components for the repair job, which includes the base assembly.
3. User complete the job at WIP > Material Transactions > Completion Transactions
4. User then issue the components to the job later at WIP > Material Transactions > WIP Material Transactions
4. The cost on the WIP job assembly is $0 because the materials are issued after job completion.
5. The Weighted Average Cost of the assembly is being diluted by these non-standard jobs.

Q2:
This works when choosing User-Defined Cost Type with Average as the cost type.

By studying the cost type System Calculated, found sometimes the job complete as 0 cost if user didn't issue material to the job before job completion. But sometimes, the job complete with a cost (not current Weighted Average Cost of the assembly) even if user didn't issue material to the job. Where did the cost come from? Why sometimes it collects cost to the job sometime not if user did not issue material before job completion?

SOLUTION

A1: The option to resolve the issue is to complete the non-standard jobs into an expense subinventory.

Since there is no cost associated when in the expense subinventory , this should not affect the inventory after performing a subinventory transfer the assembly from the expense subinventory to asset subinventory.

There is no setup that prevents the non-standard job cost from affecting the item cost if you complete into an  asset subinventory.

However, if you want the job completion cost to be at the current average cost, then when defining the WIP accounting class for your non-standard job, do not choose the completion cost source to be System Calculated.

Instead, choose User-Defined Cost Type with Average as the cost type. 

System calculated algorithm requires tracking of all actual costing of the transactions in a consistent and continuous formula, while User-defined algorithm is simply pulling the cost from a static cost type. Changing from a complex algorithm to a simple one is easy, but vice versa is difficult because it allows you to lose track and continuity of which transactions for the job have been costed with what algorithm. It is not recommended to change it back and forth. 

The best option would be to define two distinct WIP accounting classes with a different algorithm.

A2:
When using system calculated algorithm, note two design behaviors:

1. If the completion transaction has a final completion flag to be Yes, it will flush out whatever incurred value in the job at that point of time (zero or nonzero).

2. If the completion transaction does not have a final completion flag, it should be based on the job's standard material requirements. So even if you have not issued the component to the job, the completion may have a cost if the component is a standard material requirement and has its own cost.

The total required quantity is based on the standard material requirements, but the cost will be based on how much quantity and value has been incurred. The partial assembly completion will first go to job's incurred value to relieve. If it is insufficient according to the standard material requirement, the rest will be based on the current average cost of the components

It is true that the partial completion usually leads to a completion cost that is not deviated much from the current average cost because your material requirements wouldn't change often from job to job.
There is a WIP parameter for Auto Compute Final Completion. Explore it and you may need to turn it off.

If the user creates a final completion transaction manually via the completion transaction form, the only way to find out is after the fact in MMT.final_completion_flag. You may consider a forms personalization to hide this field from the users. For a WIP job with no material component defined in material requirement and completing with current average cost.


To satisfy their business requirement of not affecting regular item cost by mixing the non-standard repair jobs, the recommended two options are:

1. Complete into an expense subinventory.
2. Use a specific WIP accounting class for this type of jobs, and choose User-Defined Cost Type with Average as the cost type.