E1: 31A: Actual Cost Setup for EnterpriseOne (Doc ID 798903.1)

Last updated on JUNE 17, 2024

Applies to:

JD Edwards EnterpriseOne Shop Floor Control - Version XE and later
JD Edwards EnterpriseOne Product Data Management - Version XE and later
JD Edwards EnterpriseOne Engineer to Order - Version 9.1 to 9.1 [Release 9.1]
Information in this document applies to any platform.

Purpose

This document will provide the user with all the setup required for actual costing, such as Manufacturing Constants, Work-Center & Overhead Rates, AAIs.

Use this document to setup items properly, and read E1: 31A: Actual Cost Execution of Work Orders and Accounting Process Document 625972.1, and E1: 30A/31A: Actual Cost - Troubleshooting and Common Errors Document 656558.1 for more great information.

Overview

Actual Costing was developed to enable customers to have greater control of costs of items being manufactured. In a traditional 07 Standard Costing setup, it is recommended that costs are updated once a year. For customers using commodity materials with regular changes in costs, having to constantly update Frozen Standard costs created problems; for example, when accounting for material that had been purchased at a different 07 cost to the current cost. This loss of cost control prompted the development of Actual Costing. Two methods exist:

Weighted Average (Cost Method 02)

Weighted Average is useful for costs that change often. Use this method when on-hand inventory does not need to be revalued when the work orders are completed, but at another time.

Weighted Average has its own functionality and Simulating and Freezing Cost Method 02 cost is not supported. This causes a conflict as the Frozen Update (R30835) tries to write to the Cost Revisions (F4105) while Weighted Average functionality is trying to recalculate it.

To add X costs for parent items while using 02 Actual Costing, access the parent Cost Components (P30026/F30026) and add only X costs Simulated Net Added, Simulated Total, Frozen Net Added and Frozen Total with the same value.

Manufacturing Last Cost, or Actual Cost (Cost Method 09 )

(Actual, Manufacturing Last) is useful for items that are engineered or manufactured to order and have costs that change often and significantly. Use this method when you want to revalue your inventory each time that you run the work order completion programs.


Consideration	Explanation
Manufacturing	When using actual costing methods: • Use discrete manufacturing. • Use engineer-to-order or make-to-order practices and oversee the entry of all information on the work orders.
Inventory Transfer	When using Manufacturing Last Cost method (09): • Be aware that transferring inventory for any purposes other than the cost of goods sold (COGS) might result in incorrect inventory value. • Understand that processing for physical inventory might be more time consuming than with other cost methods.
Costing	When using actual costing methods, maintain the inventory cost level at the item, branch, and location levels (inventory cost level 3) for best results.

Actual costing can be implimented with the JD Edwards EnterpriseOne Manufacturing Accounting system without using the JD Edwards EnterpriseOne Product Costing system. If using actual costing, product costs do not need to be set up for each manufactured item, because product costs are calculated when work orders or rate schedules are completed.

Actual Costing is not supported for Process (stocking type R) or Configured (stocking type C) items.

Receipt Routing at time of Completions (P31114) is not supported for Actual Costing, because stock is revalued at time of Completions and again when P43250 Movement & Disposition (P43250) moves stock to On Hand. See Enhancement Bug 11053298.

Scope

Many companies that use the JD Edwards EnterpriseOne Shop Floor Management system want to capture and track actual or average manufacturing costs. If actual costing is used, the system calculates the cost of the product built on a work order or rate schedule based on the actual hours used and the actual quantity of issued parts. The system updates the cost based on the most current information.

Actual Costing is not supported for Process (stocking type R) or Configured (stocking type C) items.