Costing Work Order Completions To Inventory (Doc ID 1381742.1)

Last updated on NOVEMBER 24, 2021

Applies to:

Goal

Work order completions to inventory are expected to use the per assembly quantity on the bill of material. Some other rate or amount is being used to calculate the value that is completed into inventory.
When completing units from a standard discrete work order in an average cost environment, some (not all) units are completed to inventory at a value that is different than expected.

For example:
Cost history of the item 'CHA COST CONV LAB OH' which was issued to the work order
 (qty = 14,715.25).

Transactions issuing cost to the work order:

Work order value, showing completion of all 5 units on the work order.
There were only 4 units left, not yet completed, when the material above was issued to the work order.
Total overhead amount incurred on the work order is the value of the remaining 4 units on the work order when the œmaterial  was issued to the work order (see above).
Material requirements of 3,678.81 per unit should be completed for all 4 remaining units on the work order.
4 x 3678.81 = 14,715.24
Actual completions were as follows:
1 x 3,678.81 - (OK)
1 x 3,678.81 - (OK)
1 x 4,624.93 - (why a different value?)
1 x 6,739.42 - (why a different value?)
Total completions = 18,721.97, leaving an unexpected job close variance of 4,006.72.


Question:
What calculation is the work order performing to value the completed units delivered into inventory, if not the per assembly quantity on the bill of material?

We have performed the same steps as above on several other work orders and the completion valuations were as expected, with no job close variances.

Users had manual resources with overheads that were not charged on the work order, but the resource costs on the completed units worked fine. The resource overhead on the completed units was not OK.
Please keep in mind that they are trying to convert the work order costs and the overhead amounts that they  are seeing issues with is for overhead cost associated with a part issued to the work order. There was no previous level cost for that part.

Solution

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