Production Order Costing
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1 BaaERP 5.0c Maufacturig Productio Order Costig Module Procedure UP127A US
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3 Documetiformatio Documet Documet code : UP127A US Documet group : User Documetatio Documet title : Productio Order Costig Applicatio/Package : BaaERP 5.0c Maufacturig Editio : A Date : December 1999 Copyright 1999 Baa Developmet B.V. All rights reserved The iformatio i this documet is subject to chage without otice. No part of this documet may be reproduced, stored or trasmitted i ay form or by ay meas, electroic or mechaical, for ay purpose, without the express writte permissio of Baa Developmet B.V. Baa Developmet B.V. assumes o liability for ay damages icurred, directly or idirectly, from ay errors, omissios or discrepacies betwee the software ad the iformatio cotaied i this documet. Productio Order Costig
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5 Table of cotets 1. The Productio Order Costig (CST) module i BaaERP The CST cocept as applied i BaaERP CST s fuctioal procedures The modules related to CST The fuctioality of CST s busiess objects The procedure to close a productio order How to close a productio order Fiacial Results Calculatig estimated ed-item uit-costs Comparig actual ad estimated costs The subprocedure to maually issue material The procedure to archive productio orders ad productio costs Parameters that affect CST Productio results by work ceter The momet of freezig estimated productio costs Ivetory valuatio method Multiple currecies Productio Order Statuses 6-1 Productio Order Costig i
6 Productio Order Costig ii
7 About this documet Note: Read this documet to get a overview of the Productio Order Costig module s fuctioality ad to lear more about the fuctioal procedures that are related to CST. You eed o detailed kowledge of the BaaERP software to read this documet. However, you are more likely to uderstad the cotets if you are familiar with: The overall structure of packages, modules, ad sessios withi the BaaERP software. The Shop Floor Cotrol (SFC) module procedure (UP133A US). The geeral busiess procedures used i everyday busiess practice. The basic cocepts of eterprise resource plaig. For detailed descriptios of the module s sessios, refer to BaaERP s comprehesive olie Help. If you start BaaERP sessios with the Meu Browser, you will fid the sessios i the Productio Order Costig (CST) sectio uder the Shop Floor Cotrol (SFC) module. To use this documet Read Chapter 1, The Productio Order Costig (CST) module i BaaERP, if you wat to kow more about: The module s fuctioality. The relatioship of the module with other modules. The fuctioality of the module s busiess objects. Read: Chapter 2, The procedure to close a productio order. Chapter 3, The sub procedure to maually issue material. Chapter 4, The procedure to archive productio orders ad productio costs if you wat to kow more about: The sessios i the procedures. The results of the procedures. The sessios that are related to the procedures. The optioal procedures that are related to the procedures. Productio Order Costig 1
8 Acroyms used i this documet Acroym ACP ACR BOM CAT CF COM CP CPR CST FBS FIN FST GLD HRA IBD IPD PCS PUR QM ROU RPT SCS SFC SLS TI TRP WH WIP Meaig Accouts Payable Accouts Receivable Bills of Material Cost Accoutig BaaERP Cofigurator Commo Data BaaERP Eterprise Plaig Cost Accoutig Productio Order Costig Fiacial Budget System Fiace (i Commo Data) Fiacial Statemets Geeral Ledger Hours Accoutig Item Base Data Item Productio Data Project Cotrol System Purchase BaaERP Quality Maagemet Routig Repetitive Maufacturig Supply Chai Solutio Shop Floor Cotrol Sales BaaERP Maufacturig Tools Requiremet Plaig BaaERP Warehousig Work i Process Leged ticst0201m000 Close Productio Orders ticst0520m000 WIP trasfers TI SFC CST Madatory sessio Optioal sessio Package Module The module that is described i this module procedure Productio Order Costig 2
9 1. The Productio Order Costig (CST) module i BaaERP The CST cocept as applied i BaaERP. CST s fuctioal procedures. The modules related to CST. The fuctioality of CST s busiess objects. 1.1 The CST cocept as applied i BaaERP I order to cotrol costs, you must kow: What your costs are for each process that you carry out. How those actual costs compare with estimated (plaed) costs. CST is used to calculate the productio results for each closed productio order, ad to carry out calculatios ad produce reports that compare the productio results with plaed costs of productio orders. Figure 1 shows how the module is positioed i BaaERP. The diagram shows the packages ad modules that are closely fuctioally-related to CST. For a diagram that shows the iformatio flow betwee modules, see Figure 2. Coordiatio ad plaig QM RPT Productio HRA PCS SFC CST GLD CPR ACR CP Fiace FST CAT FBS ACP CF WH Baa SCS TRP IPD IBD Sales ad Purchase BOM ROU SLS PUR FIN Basic data Figure 1 Positio of CST i BaaERP Productio Order Costig 1-1
10 The Productio Order Costig (CST) module i BaaERP 1.2 CST s fuctioal procedures Productio Order Costig (CST) is a part of Shop Floor Cotrol (SFC), ad so the procedures i CST ca really be see as sub procedures of the productio order procedure, which is described i the SFC module procedure (UP133A US). However, the followig procedures are described more fully i this module procedure: The procedure to close a productio order. Closig a productio order results i the calculatio of the productio results ad the postig of the fiacial results to the Geeral Ledger (GLD). You ca also calculate ed item uit costs. The subprocedure to issue material. The procedure to archive productio orders ad productio costs. 1.3 The modules related to CST Figure 2 shows the modules that are related to CST. The arrows represet iformatio flows. WH PUR SFC BOM CST GLD FIN HRA IPD CPR ROU Figure 2 Modules related to CST The mai liks with CST are to the Geeral Ledger (GLD) i BaaERP Fiace, data that relates to Fiace (FIN) i the BaaERP Commo Data package, ad i Shop Floor Cotrol (SFC). Whe productio orders (from SFC) are closed i CST, the fiacial results are calculated ad posted to GLD. Before orders are closed, CST checks that a umber of coditios are met, icludig that: Hours are posted (HRA). Subcotractig orders are processed (PUR). Materials are issued ad warehouse orders are completed (WH). Backflushig is carried out (SFC, HRA, WH). Productio Order Costig 1-2
11 The Productio Order Costig (CST) module i BaaERP Furthermore, a close relatioship exists betwee CST ad the BaaERP Warehousig (WH) package. The followig issues are hadled: The material to issue. The WIP trasfers (itra compay). The fiacial postigs related to the issue ad the receipt of materials. The update of the Movig Average Uit Cost (MAUC) history i case of Fixed Trasfer Pricig (FTP). The update of the ivetory value i case of actual costig. Whe CST is used to compare estimated hour costs ad material costs with actual costs, the other modules show i Figure 2 are used: Bill of Material (BOM). Routig (ROU). Item Productio Data (IPD). Cost Price Calculatio (CPR). 1.4 The fuctioality of CST s busiess objects CST cotais the followig busiess objects: Productio Order Costs. WIP Trasactios ad Productio-Order Closure. Productio Order History. Productio Order Costs You ca use this busiess object to produce reports about the followig topics: Estimated ad actual hours costs. Estimated ad actual material costs. Estimated ad actual ed-item uit-costs. Work i Process (WIP) WIP trasactios by project, order, ad so o Actual productio costs. Operatio-time deviatios from orm values. WIP Trasactios ad Productio Order Closure Use this madatory busiess object to: Close productio orders, that is to: Calculate ad post the fiacial result (or just simulate the calculatio). Update the history of the actual costig ad hours accoutig. Chage the productio-order status from Completed to Closed. Reset the status from Closed to Completed. Prit the posted productio results by work ceter. Productio Order Costig 1-3
12 The Productio Order Costig (CST) module i BaaERP Productio Order History This optioal busiess object ca be used to: Archive productio orders ad costig history. Prit various reports about costig history. Productio Order Costig 1-4
13 2. The procedure to close a productio order This chapter describes: How to close a productio order. The results of closig a productio order. 2.1 How to close a productio order The procedure s results Whe the status of a productio order chages from Completed to Closed: The fiacial results are calculated. The results are posted to the geeral ledger (GLD) i BaaERP Fiace ad to the Fiace (FIN) module i the BaaERP Commo Data package. The actual costig ad hours accoutig history is updated. You ca alter the calculatio of fiacial results with several parameters, icludig (see Sectio 2.3): Whether the WIP is calculated by work ceter. The momet of freezig estimated productio costs. Ivetory valuatio method. Multiple currecies. Productio Order Costig 2-1
14 The procedure to close a productio order Figure 3 shows the steps i the procedure. 1 Productio-Order Procedure i SFC 2 Report Operatios Completed (tisfc0530m000) 1a Cacel Productio Orders (tisfc0203m000) 5 Reset Productio Order Status (ticst0203m000) 3 4 Report Orders Completed (tisfc0520m000) Close Productio Orders (ticst0201m000) 6 Archive Productio Orders (ticst0250m000) 7 Archive Costig History (ticst2250m000) Figure 3 To close a productio order Step 1 Step 1a Step 2 The procedure cosists of the followig steps: Productio-Order Procedure i SFC The procedure to close a productio order i CST ca be see as part of the productio-order procedure. For more iformatio about the etire procedure, see the SFC module procedure (UP133A US). Cacel Productio Orders (tisfc0203m000) You ca cacel the productio order at this poit. Report Operatios Completed (tisfc0530m000) I this optioal step, you ca report some of the operatios completed, rather tha the whole order. Productio Order Costig 2-2
15 The procedure to close a productio order Step 3 Step 4 Step 5 Report Orders Completed (tisfc0520m000) You must carry out this step before you ca close the productio order. The followig coditios must also be met before you ca carry out step 4: Allocated materials are issued. Warehousig orders are completed. Ispectio orders are processed. Hours etered are posted. Subcotractig orders are processed. Purchase ivoices for subcotractig are approved. Backflushig is performed. Close Productio Orders (ticst0201m000) Use this step to set the productio-order status to Closed (see Chapter 5). Whe you close the order, BaaERP: Calculates the actual ed-item uit-cost. Calculates the fiacial results of the productio order (see Sectio 2.2 for more iformatio). Updates the history of the actual costig ad hours accoutig. Corrects surcharges based o actual costs. Deletes the productio-order plaig of the order. You must eter a closig date (which may be i the past) for the productio order. You ca also use this step to simulate the results, that is to calculate the fiacial results, but ot to post the calculated results to the geeral ledger or close the order. You ca also post the results without closig the order. Reset Productio Order Status (ticst0203m000) Whe a productio order is closed, you caot issue materials or accout hours for that order. If you eed to assig additioal materials or hours to a productio order, you must use this step. The status is reset from Closed to Completed (see Chapter 3). 2.2 Fiacial Results BaaERP calculates the followig results: Price variace * : the differece betwee estimated ad actual price of a productio order for materials or hours. Price variace = (estimated price actual price) actual quatity. * A variace is a measure of the differece betwee the estimated (plaed or budgeted) costs ad the actual costs. You do ot have to calculate both price ad efficiecy variaces. Productio Order Costig 2-3
16 The procedure to close a productio order Efficiecy variace: the differece betwee actual ad plaed productio order quatities for materials or hours. Efficiecy variace = (estimated quatity actual quatity) estimated price. Calculatio variace: the variace i productio results that is ot accouted for by price variace ad efficiecy variace. It ca be caused by actios such as alterig the fixed trasfer price (FTP) of ed items, or differeces betwee estimated ad actual surcharges. It is used to clear the WIP. Calculatio variace = productio results - price variace - efficiecy variace. 2.3 Calculatig estimated ed-item uit-costs The ed-item uit-cost is also kow as the order cost-price. There are three circumstaces uder which BaaERP estimates the ed-item uit costs: Whe you chage the order status (depedig o the value of the Momet of Freezig Estimated Uit Costs field i the Productio Orders (tisfc0101s000) sessio. Whe you use the Calculate Estimated Ed Item Uit Costs (ticst0210m000) sessio. Whe you use the Prit Differeces betwee Froze ad Curret Estimated Costs (ticst0411m000) sessio. Whe you use this sessio, the costs are ot stored. Whe BaaERP estimates the ed-item uit costs, it calculates the followig costs: Operatios (that is, hours). Baa uses all estimated data about productio times, ad ma ad machie hours to calculate the cost per ed-item uit for operatios based o total costs of employees, machies ad overheads. Materials costs. Baa uses the stadard costs price to calculate the material costs for each compoet. Ed-item surcharges. You defie which surcharges you will use for materials ad operatios i the Cost Price Calculatio (CPR) module. WIP trasfer prices. This is oly calculated if the Productio Results per Work Ceter check box is selected ad the Trasfer WIP Method is other tha Not Implemeted (both i the SFC Parameters (tisfc0100s000) sessio). Productio Order Costig 2-4
17 The procedure to close a productio order Whe you have calculated the ed-item costs, you ca display the results i the followig sessios: Ed Item Uit Costs (ticst0510m000) sessio. Prit Estimated versus Actual Ed Item Uit Costs (ticst0410m000) sessio. Prit Differeces betwee Froze ad Curret Estimated Costs (ticst0411m000) sessio. 2.4 Comparig actual ad estimated costs A umber of sessios are available to eable you to compare actual ad estimated costs for materials ad for hours. These sessios iclude: Prit Estimated versus Actual Material Costs (ticst0401m000). Prit Estimated versus Actual Hours Costs (ticst0402m000). Prit Actual Productio Costs (ticst0415m000). Prit WIP Trasfers (ticst0420m000). Prit Posted Productio Results by Work Ceter (ticst1401m000). Prit Operatio Times Deviatio agaist Norm (ticst1402m000). Prit Work-i-Process (ticst0450m000). Prit Estimated versus Actual Ed Item Uit Costs (ticst0410m000). Of course, the correct parameters (see Sectio 2.3) must be selected to produce reports at a particular level. For example, if you are ot usig WIP trasfers, you caot prit the related reports. More details of the exact cotets of the reports are give i the olie Help. There are also display sessios provided to show the same data. Productio Order Costig 2-5
18 The procedure to close a productio order Productio Order Costig 2-6
19 3. The subprocedure to maually issue material A part of the productio-order procedure ivolves issuig material for productio orders. The productio-order procedure is more fully described i the Shop Floor Cotrol (SFC) module procedure (UP133A US). The steps ivolved to release material maually (without backflushig) are as follows: 1 Shop Floor Cotrol Procedure 2 Material to Issue for Productio Orders (ticst1501m000) 3 Iitiate Ivetory Issue (tisfc0207m000) 4 Report Operatios Completed (tisfc0530m000) 5 Report Orders Completed (tisfc0520m000) 6 Close Productio Orders (ticst0201m000) Figure 4 The procedure to issue materials Step 1 Step 2 The productio-order Procedure This procedure is a itegral part of the productio-order procedure i shop floor cotrol. The productio order status must be Released before you ca issue material. Material to Issue for Productio Orders (ticst1501m000) Use this step to adjust your plas for the material you require for the productio order. This step is madatory if: The Maual Issuig check box is selected i the SFC Parameters (tisfc0100s000) sessio. The material cocered is ot backflushed. Productio Order Costig 3-1
20 The subprocedure to maually issue material Step 3 Iitiate Ivetory Issue (tisfc0207m000) Use this Step to issue the compoets from the warehouse. Whe you do this (or whe you book hours) the productio order status becomes Active. Steps 4-6 Cotiue with productio-order procedure The other steps i the productio-order procedure must ow be carried out, at least util the productio order is Closed. Productio Order Costig 3-2
21 4. The procedure to archive productio orders ad productio costs Whe you have fiished usig the costig data, you ca move the data to a archive compay. I BaaERP, separate compaies are separate data sets. The archivig procedure has the followig steps: 1 Close Productio Orders (ticst0201m000) 2 Archive Productio Orders (ticst0250m000) 3 Archive Costig History (tisfc0530m000) Figure 5 The archivig procedure Step 1 Step 2 Step 3 Close Productio Orders (ticst0201m000) Before you ca archive productio data, the orders must have the status Closed. Subcotracted operatios must also have bee completed. Archive Productio Orders (ticst0250m000) Use this step to move the actual costig data ad productio-order data of closed productio orders ito a separate archive compay. The data from your logistic compay is the deleted. Archive Costig History (ticst2250m000) This optioal step ca be used to move historical data of closed productio orders to a archive file. The historical data are: Material usage. Hours spet. Operatios time spet by item. Productio Order Costig 4-1
22 The procedure to archive productio orders ad productio costs Productio Order Costig 4-2
23 5. Parameters that affect CST You ca alter the way that CST calculates productio results with several parameters. More details are give i the olie Help, but four of the more importat oes are outlied here: 5.1 Productio results by work ceter You ca select the Productio Results per Work Ceter check box i the SFC Parameters (tisfc0100s000) sessio to defie whether the productio results are calculated by work ceter. If so, WIP trasfers are possible, if the Trasfer WIP Method is other tha Not Implemeted. You ca also check whether price ad efficiecy variaces are posted to each work ceter, or to the productio order s calculatio office. A WIP trasfer is the trasfer of the value of the work i process from oe work ceter to the ext, i accordace with the physical trasfer of a subassembly to the work ceter where the ext operatio must be performed. You ca use WIP trasfers to make sure that the work i process is recorded i the work ceter that is actually workig o the order. This is useful if: The WIP is a high value. There is a log productio time. Or the differet work ceters use differet currecies. The differet work ceters belog to differet eterprise uits. 5.2 The momet of freezig estimated productio costs You ca use the Productio Orders (tisfc0501m000) details sessio to determie whe the cost estimates are froze (that is, whe they caot be altered aymore): At productio-order creatio. At order release. Before the first WIP trasactio. A WIP trasactio is ay actio that affects the work i process of a productio order or work ceter such as the issue of material, or the bookig of hours. The momet of freezig ca affect the value of the estimated cost, ad so affect the compariso betwee estimated ad actual costs. Productio Order Costig 5-1
24 Parameters that affect CST 5.3 Ivetory valuatio method 5.4 Multiple currecies You ca use the Ivetory Valuatio Methods (whia1100m000) sessio to select a ivetory valuatio method. The method you choose will affect the value of your materials, ad so the actual costs. First I, First Out (FIFO) assumes for calculatio purposes that the oldest ivetory (first i) is the first to be used (first out). Last I, First Out (LIFO) assumes for calculatio purposes that the most recetly received (last i) item is the first to be sold (first out). Movig Average Uit Cost (MAUC) uses the arithmetic mea value of a defied amout of the most recet ivetory. Lot Costig is a method i which the valuatio price or cost price is calculated separately for each lot. Fixed Trasfer Pricig (FTP) is ot a actual valuatio method; a calculated value is used to value the ivetory. If you use FTP valuatio you ca choose where to post price variaces ad efficiecy variaces: O the productio order. O the work ceter (if applicable). Icluded i the calculatio variace. If oe of the first four methods is used (that is, a actual valuatio method), the productio results are posted to BaaERP Warehousig (that is, the ed item s warehouse) rather tha to a work ceter. Whe you istall BaaERP, you select oe of the followig modes: Sigle currecy system. All costig data is etered i the same currecy for each logistic compay. Idepedet currecy system. All trasactios are doe i up to three currecies, which etered idepedetly. Actual ad estimated costs are calculated i the three currecies. Depedet currecy system. Each work ceter ca have its ow currecy, ad exchage rates are used to process trasactios betwee work ceters that operate uder differet currecies. Productio Order Costig 5-2
25 6. Productio Order Statuses Whe you are workig with productio orders, they pass through a umber of differet statuses. These statuses are summarized i the followig table ad figure. The status chages of productio orders From status To status/cst actio Sessio Plaed Productio Orders (tisfc0501m000) Plaed Scheduled The Scheduled status oly appears whe the productio order is scheduled by BaaSCS Scheduler. Plaed Sequece Phase Geerate Lie Sequeces (tisfc7230m000) The Sequece Phase status is oly valid for FAS item productio orders. Plaed, Scheduled or Sequece Phase Plaed, Scheduled or Order Documets Prited Released Released Order Documets Prited Released Active (Material costs posted) Active (Actual operatio costs posted) Prit Productio Order Documets (tisfc0408m000) Release Productio Orders (tisfc0204m000) Iitiate Ivetory Issue (tisfc0207m000) Process Hours Accoutig (tihra1210m000) Released Caceled Cacel Productio Orders (tisfc0203m000) Released, or Active Completed Report Orders Completed (tisfc0520m000) Completed Closed Close Productio Orders (ticst0201m000) Closed Completed Reset productio-order status (ticst0203m000) Closed Archived Archive Productio Orders (ticst0250m000) Productio Order Costig 6-1
26 Productio Order Statuses Productio orders scheduled by BaaSCS Schedulder Scheduled Plaed Order documets prited FAS Items oly Sequece Phase Released Active Completed Caceled Closed CST Archived Figure 6 The statuses of a productio order Productio Order Costig 6-2
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