Troubleshooting
Costing
Alan Chorney
Professional Services
Visual South, Inc.
Visualize Success 2012
Auditing Inventory Costs
•
•
•
•
Cost Flow Inheritance
Exception Auditing
Inventory/Work In Process Reconciliation
Audit Tools
– Costing Tools
– Reports
– Correction Utilities
Cost Flow - Inheritance
ADJ Adjustments
FG Receipts
WIP Issues
3. Issue >>>
5. FG Receipts >>>
Inventory
>>>11. Transfers <<<
PUR Receipts
SLS Shipments
Purchase Receipts
•Purchase Receipts get their value from settings
chosen in Application Global Maintenance
–Standard Costing – Part Maintenance
–Actual Costing - Source of Raw Materials
•Purchase Order
•A/P Voucher
•Purchase Returns get their value from:
–Receipt value of the FIFO Layers for the Part
that was Received
–Vouching Purchase Returns for a different
value will create a Purchase Return Expense
W.I.P. Issues
•Inv. Trans. Issues take their value from the next
available FIFO Layer
•Linked PO Purchase Receipts are AutoIssued to WIP
and inherit Purchase Costing
•Issue Returns get their value from the issue
layer for the Part that was Issued to WIP
FG Receipts
•FG Receipts take
–Standard Costing
•Part Standard
–Actual Costing
•Projected Value
•Actual Value
•FG Receipt Returns reinstate WIP Costs
based on the prorated value of the
original receipt
Shipments
•Shipments take their value from the next available
FIFO Layer
•Linked Work Orders Shipments are AutoReceived to FG
and inherit WIP Costing
•Shipment Returns get their value from the
Weighted Average of the FIFO Layers for the Part
that was Shipped on the Customer Order.
•Linked Ship Returns Reinstate W.I.P.
Adjustments
•Adjust Ins take their
value from
•Adjust Outs take
their value from the
next available FIFO
Layer
•Part Maintenance
•Inventory Transaction
Value Override during
data entry
Adjust Outs do not reverse
Adjust Ins
Inventory
Chart of Accounts Guidelines for Exception
Auditing
• Exception Auditing must be Designed into the
chart of accounts
• Total Inventory comprises only and all
inventory control accounts
• Product Codes supply the Sub-ordinate detail
to the Total Inventory
• Transaction Lines support the Product Code
Summaries
• All Interface Accounts, Product Codes and
Overrides are VISUAL Control Accounts
Exception Auditing
Report Sub-Totals and Subordinate Parent
Accounts synchronize to expose supporting
Detail to the Transaction Level
Work In Process Balance Report By
Product Code
Report Totals and Summary
Parent Accounts synchronize to
create a One-Look Bottom-Line
Reconciliation
Proper Period End Closing Summary
(Manufacturing Activity)
• 1. All Data entry for the period is complete
• 2. Run Costing until no updates are found and
Prepare Manufacturing Journals for the Period
• 3. Post Manufacturing Journals for the Period
• 4. Run Costing Tools for exceptions
• 5. Correct any exceptions not due to future
periods
• 6. Repeat 3, 4, & 5 until exceptions are clear
Auditing Inventory Costs
(Inventory Reconciliation)
•Print the Inventory Balance Report and compare to
Account Balance
•Verify all MFG Journals are Posted
•Verify all Inventory Account Batches are PUR, WIP, FG, SLS
or ADJ - Correct all other batch type balances
•Correct PUR, FG, or ADJ Credits and WIP or SLS Debits
•Correct PUR Debits that are from expense purchases
•Print the final Inventory Balance Report and compare to
Account Balance
Print the Inventory Balance Report and
Compare to Account Balance.
GL=130,179.23
Inv.Bal=153,366.23
Verify all MFG Journals are Posted
• Test for Unposted Transactions
Verify all Inventory Account Batches are
PUR, WIP, FG, SLS or ADJ
• Use the Accounting Window to Inspect Accounts
• Watch for Self Reversing Transactions
Sub-Ledger
detail
maintains
Transactional
Logic
Print the General Journal by Batch Type
Correct PUR, FG, or ADJ Credits and WIP or
SLS Debits.
• Note the Credit Adjustment
Self-Reversing
Transactions
Correct PUR Debits That are From Expense
Purchases
• Expect to see Debits from PUR, so watch for the
Inventory Control Accounts being used on a line
Think in
terms of
Transactional
Logic -
No Part_ID
means No
Inventory
Transaction
WIP - Work In Process
• Four Work In Process (WIP) reports provide
corroboration for G/L Balances
– Ledger/Post MFG Journals/Reports/WIP
Balance Report
– Eng/Mfg/Work In Process Report
– Eng/Mfg/Work Order Master Cost Report Comparative with Breakdown
– Manufacturing Window Info Costs
WIP – WIP Balance Report
WIP – Work In Process Report
WIP Report Corroboration
Correct Exceptions Using Audit Tools
• Check Exceptions using Costing Tools - Set Posting
Candidate and Prep Journals
• Check Cost Distribution Analysis
– Recalculate Distributions/Force FIFO
• Compare Inventory Reports for Qty & Value
– VMFixWRK - Resummarize Work Order
– VMFixOHQ - Fix Part table to Match Inv. Trans Table
– VMFixIPB - Create Transactions to Match Part Location
Table
Costing Tools
• Consists of three major areas of
functionality:
– Costing Tools
– Analytical Reports
– Recalculation Functions
Costing Tools
• Costing Tools is an enhanced version of the Print Preparation
Analysis Report
–
–
–
–
–
Only Posting Candidates of “N” will come across as exceptions
Ability to set individual Posting candidates
Preparation of Journals
Detail tables added
WIP Balance check added
• The design of the window is to identify possible costing
exceptions. The exceptions do not directly point out G/L
items. Each exception would need to be investigated to
determine what correction, if any, needs to be performed.
Costing Tools
Types of Costs to
check include:
Purchases
WIP
Finished Goods
Shipments
Adjustments
Indirect Labor
WIP Balances
Costs can be checked
by ID or leave blank to
check all items in the
category.
The posting date refers to
the Total Posted column.
This will show what has
been posted up to that
posting date.
Filtering Options
allow items to be
viewed by
Total Transactions
and Total Transaction
Detail.
Exception Processing
allows items to be
viewed that show a
difference between the
Total Transaction
amount and the Total
Posted amount.
Costing Tools
Total Transactions and
Total Posted amounts are
Compared to determine
If items need to be
Re-evaluated.
Note: A journal can be
prepared without
running Costing
Utilities.
Recalculation Functions
• The Recalculation functions in Costing Tools
include the following:
– Recalculate Distributions
– Recalculate Distributions W/Force FIFO
– Recalculate WIP and Inventory Balances
– Recalculate Standards (used as part of the process to
reset standard part costs)
Recalculate Distributions
• Used to re-evaluate manufacturing activity
distributions to the general ledger
– Uses existing in transactions to update out
transactions
– Does not break linked transactions
– Generally used when inventory transactions
have been back dated
Recalculate Distributions
\ADMIN\COSTING TOOLS \ FILE \ RECALCULATE DISTRIBUTIONS
Distributions can be
recalculated for a range
of parts or for all parts
by leaving the range blank.
Distributions can also be
recalculated for non-part
transactions.
By indicating a date to
Process transactions on
or after, Recalculate
Distributions will only
process transactions
after that date.
Recalculate Distributions
Recalculation Methods are based on the following three procedures:
NOTE: All of the above procedures can create
Distributions to the General Ledger.
Recalculate Distributions
COSTED POSTING
TRANSACTION_ID
PART_ID
WORKORDER_BASE_ID
TYPE CLASS QTY QTY
CANDIDATE MATERIAL LABOR BURDEN SERVICE
==============
==============================
==============================
==== ===== ==============
==============
=================
=================
===============
===============
================
11 MMC-FM0001
I
A
3
3N
166.05
91.71
180
92.25
12 MMC-FM0001
I
A
10
2N
553.5
305.72
600.02
307.5
13 MMC-FM0001
I
A
4
0N
221.4
122.28
240
123
104 MMC-FM0001
O
I
5
5N
276.75
152.85
300
153.75
124 MMC-FM0001
O
I
5
5N
150
195.5
211.38
0
Recalculate Distributions
COSTED POSTING
TRANSACTION_ID
PART_ID
WORKORDER_BASE_ID
TYPE CLASS QTY QTY
CANDIDATE MATERIAL LABOR
BURDEN SERVICE
==============
==============================
==============================
==== ===== ==============
==============
=================
=================
===============
===============
================
11 MMC-FM0001
I
A
3
3N
166.05
91.71
180
92.25
12 MMC-FM0001
I
A
10
7N
553.5
305.72
600.02
307.5
13 MMC-FM0001
I
A
4
0N
221.4
122.28
240
123
104 MMC-FM0001
O
I
5
5N
276.75
152.85
300
153.75
124 MMC-FM0001
O
I
5
5N
276.75
152.86
300.01
153.75
IN_TRANS_ID OUT_TRANS DIST_QTY
MATERIAL LABOR
BURDEN SERVICE
=========== ====================== ===========
===========
===========
===========
===========
===========
===========
===========
===========
12
124
5
276.75
152.86
300.01
153.75
Recalculate Distributions – With Force
FIFO Re-evaluation
• Should only be run on a part-by-part
basis
• Breaks all links and re-builds them
assigning costs based on transaction
date
– Out transactions may be re-valued based on backdated transactions
Recalculate Balances –
WIP & Inventory
• Designed to re-populate Balance tables
• Should be run after performing Recalculate
Distributions to update the Balance table
• Can be used for a range of parts or for all parts
• Can be restricted to a specific posting date
Recalculate Balances –
WIP & Inventory
Reports – Inventory Analysis
• Inventory Valuation Reports
– Inventory Balance
– Inventory Valuation
– Inventory Transactions
• Costing Tools Reports (Used for
reconciling inventory costs)
– Cost Distribution
– FIFO Distribution
Inventory Valuation Reports
The Four Inventory Reports:
• Ledger/Post MFG Journals / File - Inventory Balance
Report
– Uses the Persistent Transaction Detail Tables to
Balance to the General Ledger
• Reports/Inventory Valuation Report
– Posted Value Traces back through the Distribution
Tables for In and Out Values
– Cost Layer Detail shows Inventory Transaction
Valuation by Costed Quantity vs. Quantity
• Tools/Inventory Transaction Entry/Print...
– Shows the Transaction Value of each Inventory
movement as it is right now
Cost Distribution Analysis
Compares Transaction against Posted Values
This report shows the
Demand/Supply
relationship. Out layer
cost (Shipment - out of
inventory) with the IN
layers that are “Costed”
against the Out
transaction.
Any difference between
the Out Amt. and the In
Amt. indicates a cost layer
corruption that will
require the Distributions
to be recalculated.
Costing Tools : FIFO Analysis
Reveals Source & Use instead of Demand & Supply
IN layer cost (Cost layers in inventory) with the OUT layer information
Corrective Utilities
• The following utilities are available to correct
exceptions in addition to the Recalculate
functions:
– VMFIXWRK – Re-summarizes work order information
– VMFIXIPB – Corrects imported part balances
– VMFIXOHQ - Re-sets on-hand quantity information
Thank You
• alan.chorney@visualsouth.com