Requirements - Standard Costing / Job Costing Reporting (SC)

Requirements - Standard Cost /Job Cost Reporting (SC)

Overview

A cost accounting system captures the operating costs of a manufacturing company and distributes those costs to its products. It also measures actual performances and costs against those that were planned and accounts for variances as they occur. Three major elements can be considered parts of cost accounting:

• Cost center accounting accounts for all costs and performances that add value to a product (or part).
• Job order costing accumulates the material, labor, and overhead costs attributable to each work order as it progresses through the shop.
• Cost build-up is the process of rolling up costs on a level-by-level basis through structured bills of material to arrive at total product costs or a standard value.

Standard costs are predetermined costs, used for comparison with actual costs. Standards are the yardstick used to judge the overall efficiency of operations and the performance of individual sections of the enterprise. The variances are summarized and reported to management for analysis. Significant variances are warnings that problems exist in the production cycle.

One of the problems of standard costing is the necessity for continual supervision of the standards, which are always subject to change. All cost systems vary, and seldom can one system be uprooted and transplanted intact in another company - even if that company is in the same industry. However, most manufacturing companies face similar problems in the area of costs, and certain basic concepts and procedures are common to all cost accounting systems.

Manufacturing Costs

• Develop costs using the bills of material, the item master file, and routings.
• Provide for multiple cost types for a product or project account:
• Budgeted
• Current manufacturing
• Simulated
• Current engineering
• Maintain costs at both the unit and total level. Unit level costs consist of the cost to make or buy an item excluding the costs of its components. Total level costs are the unit level costs plus the cost of the components
• Maintain separate cost elements for:
• Material
• Labor
• Fixed burden
• Variable burden
• Outside vendor
• Material burden
• Overhead
• Manually override item cost elements at either the unit or total level.
• Develop costs without the use of:
• Routing and work center data bases
• Bill of Material data base
• Automatically distribute factory labor to the proper work order or General Ledger cost account:
• Actual hours
• Standard hours
• Actual dollars
• Standard dollars
• Labor rate variance
• Labor efficiency variance
• 0verhead rate variance
• Report direct labor costs by:
• Labor code
• Work center
• Part number
• Department
• Perform cost roll-ups selectively by:
• Individual item
• Low level code
• Profit/cost center
• Product line
• Maintain item cost elements for:
• Current cost
• Standard cost
• Average cost
• Previous standard
• Simulated
• Budgeted
• Value inventory by:
• FIFO
• LIFO
• Standard cost
• Average cost
• Actual process cost
• Weighted average cost
• Report average cost of an item during a given period.
• Compute actual costs, variances, cost percentages, and other statistics for all organizational levels.
• Apply separate overhead rates for:
• Material
• Direct labor
• Machines
• Other
• Report scrap costs by:
• Type of scrap
• Part number
• Work center
• Department
• Work order
• Maintain and report labor rate and efficiency variances by:
• Department
• Product line
• Part number
• Work center
• Work order
• Provide the following methods for allocation of overhead:
• Based on company percent
• Based on facility percent
• Based on work center/department percent
• Based on labor grade assigned percent
• Based upon machine percent
• Allows compound overhead calculation
• Maintain and report applicable overhead rate and efficiency variances by department for each product line
• Maintain Purchase price variance by:
• Purchase order
• Part number
• Product line
• Vendor/contractor
• Maintain and report material usage, mix and substitution variances by:
• Cause
• Department
• Product line
• Part number
• Work order
• Work center
• Separately identify scrap labor, rework labor, warranty labor, Engineering labor and other non-production labor to avoid misallocation of variances
• Automatically distribute departmental job cost variances (including labor rate, labor efficiency, material usage, purchase price and overhead rate and efficiency) to the proper General Ledger account.
• Inquire, on-line, into the status of open work orders either at:
• Summary level (i.e., total work orders)
• Detail level (i.e., a specific work order)
• Maintain an actual cost history file by:
• Part number
• Work order
• Work center
• Department
• Product line
• Maintain and report both standard and actual cost information by work order.
• Compute average cost for a part for any specified period. Automatically update the current material cost for purchased parts when a purchase order line item is closed by A/P.
• •Enter and maintain the following standard value for all manufactured parts by work center:
• Outside contracting
• Direct labor hour
• Direct labor rate
• Direct labor cost
• Overhead percentage of direct labor(applied to hours)
• Overhead percentage of machine hour
• Overhead rate
• Overhead cost
• Quantity scrapped
• Enter and maintain the following actual values for all manufactured parts by work center:
• Direct labor rate
• Overhead percentage of direct labor
• Overhead percentage of machine hour
• Overhead rate
• Automatically update the following current values for manufactured parts by workcenter:
• Direct labor hours
• Direct labor costs
• Overhead costs/rates
• Monitor and report in detail all labor, material, and outside contractor charges for a work order.
• Segregate overhead into fixed and variable components.
• "Back explode" component standard costs within a work center at the time of product completion to measure cost performance.
• Compute a "moving average" cost based on recent purchase prices.
• Accumulate actual and standard costs against work centers.
• Compute variances of actual costs from standard costs and maintain the following variances:
• Material usage
• Material substitution
• Labor rate
• Labor efficiency
• Lot size
• Machine usage
• Provide for automatic rollover of costs from one cost type to another. For example, this feature would permit the current year's manufacturing costs to become next budgeted costs.
• Permit selected costs to be changed by a percentage for simulation purposes.
• Transfer costs and units between work orders
• Establish "master" and "sub" workorder relationships and report accumulated costs at both the sub and master (total)level.
• Automatically calculate and optionally re-apply overhead rate variances at the end of each period.
• Maintain total quantity started, in process and completed at both the workorder and operation level for yield analysis.
• Evaluate the actual accumulated cost of in-process work orders to ensure that they are not in excess of their net realizable value.
• Compute and record work in process inventory relief and transfer to finished goods the value of all units completed.
• Manually adjust cost element data to reflect manual journal entries affecting work order cost.
• Segregate overhead into fixed and variable components.
• Create a work order product costing record directly from the work order record containing standard hours and materials maintained in the shop floor control application.
• Perform department and work center analysis of cost performance on both an individual work order basis and on an aggregate basis.
• Automatically post the following factory labor cost elements to the proper work order from the labor distribution application.
• Actual hours
• Actual dollars
• Overhead dollars
• Permit all or selected costs to be temporarily changed by a percentage for simulation purposes.
• Compute and report a "moving average" cost based upon recent purchase prices, outside processing costs, and actual labor hours on a First-In, First-Out method. Also to highlight any parts where the calculated average exceeds the current actual.
• Consider the overtime premium as:
• Direct cost to a work order
• Overhead cost for a work center

Interface to Other Applications

• Item Master Cost – The item master cost file must be updated with standard and actual costs in order to maintain accurate product cost data-
• Shop Floor Control –The Work Center and Routing file must be updated with labor standards and rates in order to provide accurate job cost summaries. Work order status information provides actual and standard manufacturing costs.
• Accounts Payable – Provides information on purchase unit costs and Journal entries for outside contracting for material to be automatically distributed to the proper work order and General Ledger account.
• Bill of Materials – The roll-up feature in the Bill of Material application will be used to compute a cost buildup for use in developing standard material costs and compare current actuals to standard at selected intervals.
• General Ledger – Entries for adjustments and variances will be automatically entered into the General Ledger, as well as for work order closures, transfers and partial shipments.
• Inventory Control – Issues, returns to stock, returns to vendor and scrap will be automatic-ally charged to the proper work order as a result of inventory transactions.
• Payroll-Labor Distribution – Labor costs are provided by this application. This includes regular, overtime, and premium pay. This module can also provide total hours worked for efficiency comparisons. Actual labor expense by employee is charged to the proper work order via the Labor Distribution application.

Reports

• Standard Cost Report – Printed upon demand, this report gives the summarized cost roll-up for any assembly, showing the "standard "cost" and current cost.
• Basic Manufacturing Cost Report – Printed upon demand, this report gives the standard and current assembly costs showing all cost elements in both hours and dollars for material, set-up, machine, direct labor, and overhead.
• •Single Level Costed Item – Printed upon demand, this report may be requested as either a standard, current or other cost category showing extended costs for labor, material, overhead and other cost elements. This report will show all lower level labor and overhead costs rolled-up as the higher level material costs.
• Indented Costed Product Report – Printed upon request, this report is a costed indented bill of material similar to a costed bill of material except it details and extends all lower level costs - material, labor and overhead.
• Cost Exception Report – Printed upon request, this report lists standard cost by part number for all manufactured parts whose current or average costs differ by more than a predetermined amount from the standard costs.
• Summary Cost Report – Printed upon request, this report lists standard and actual costs with primary sorts by:
• Part number
• Product line
• General Ledger account
• All fabricated parts
• All purchased parts
• Profit/cost center
• Cost Trend Report – Printed upon request, this report gives the standard and current costs for each part requested over the past work order or purchase order closures against that part number. This report may be limited to listing only those parts whose costs have changed by more than a predetermined percentage from one order to the next.
• Work Order Status Report – This report lists either all open work orders or scheduled workorders. This report will list by cost element within the work order, each change made to an open work order. Also listing is the remaining cost to complete.
• Open Jobs Summary Report – This report details each open work order in work order sequence. The information presented includes part number, description, and total accumulated cost for material, labor and overhead.
• Closed Work Order Detail Cost Report – This report chronologically details all material, labor and overhead charged to a work order. It shows the actual, standard and the variance.
• Costed Inventory Summary – This report lists by part number and part category the standard and current cost for raw material, work-in-process and finished goods.
• Costed Inventory by Part Number Report – This report lists by part number, the unit of measure, standard cost, on-hand quantity, on-hand standard dollar value. and the receiving quantity, receiving average dollar value, MRB quantity, MRB average dollar value, WIP quantity and WIP average dollar value.
• Costed Raw Material Report – This report lists the same information as the Costed Inventory Report for raw materials only.
• Costed Finished Goods Report – This report lists the same information as the Costed Inventory Report for finished goods only. In addition, standard hours, labor, material, outside processing and overhead are included.
• Costed Work-In-Process Report – This report lists, for work-in-process only, the same information detailed in the Costed Inventory Report. In addition, standard hours, labor, material, outside processing and overhead are included.
• Transaction Listing – This report, generated upon request, lists all transactions for a part number over the time period specified.
• Costed Receiving Inventory Report – This report lists, for raw material and finished goods, receiver number, date received, part number, description, quantity received, quantity in MRB, quantity RTV, quantity scrap, quantity in stock, receiving inventory, average cost and extended standard dollars.
• Costed MRB Inventory Report – This report lists for Receiving and other rejects, the Material Review tag number, date placed in MRB, part number, description, unit of measure quantity, receiver number, average cost and total standard dollars.
• Costed Uninvoiced Receipts Report – This report lists all raw material, finished goods and outside contracting, for which vendor invoices have not been received. Information displayed includes receiver number, date received, part number, description, P/O number, vendor number, quantity received, quantity invoiced, uninvoiced balance, average cost and total standard dollars.
• Direct Labor Rate Variance and Applied Over-head Report – This report lists by operation, the employee number, employee name, date, work order number, operation number, labor hours, payroll hours, variance, labor dollars, payroll dollars, and variance.
• Department Labor Summary – This report lists by department and operation, the MTD and YTD labor hours and dollars.
• Direct and Indirect Labor Summary – This report lists for indirect labor and direct labor, the operation number, the General Ledger account and MTD and YTD labor hours and dollars.
• Performance Summary – Lists by part number, the unit of measure, standard hours, standard labor, standard outside processing, standard material, standard overhead and total standard cost vs. their respective average costs.
• Costed Bill of Material – This report lists, by part number, all component subassemblies and discrete parts. Cost information displayed is unit of measure, quantity per, total quantity, total labor hours, total labor dollars, total material dollars, total outside processing, total overhead and a grand total.
• Standard Gross Profit Analysis – Printed as required, it lists the standard gross profit dollars and percent for each saleable end item.
• Cost of Goods Sold Report – This report lists, by part number, the net quantity sold MTD and YTD, net revenue MTD and YTD, cost MTD and YTD, gross profit in MTD dollars, YTD dollars, MTD percentage, YTD percentage.
• Costed Sales Forecast – Printed upon request, this report lists by part number and forecast period the forecast quantity, forecast revenue, forecast cost, gross profit dollars and gross profit percents.
• Cost of Goods Master Scheduled Report – Printed upon request, this report lists, by part number and MPS period, the quantity, forecast revenue, forecast cost, forecast gross profit dollars and forecast gross profit percent for all master scheduled items.
• Purchase Price Variance – Variance by purchase order, part number and product line.
• Monthly Management Summary – This report lists current month, last month, monthly average and year-to-date information for variances, cycle counts, inventory, purchase labor, unplanned activity, sales and cost build up errors.
• Monthly Work Center Production Report – Details MTD and YTD unit production by work center.

Volumes

• Number of yearly updates to standard costs
• Number of item cost roll-ups performed monthly

Key Fields

• Work order number
• Cost center
• Material – added this level
• Material – from all levels (value added)
• Labor – added this level
• Labor – from all levels
• Variable overhead – added this level
• Variable overhead – from all levels
• Scrap – added this level
• Scrap – from all levels
• Standard hours
• Actual dollars
• Standard dollars
• Labor rate variance
• Labor efficiency variance
• Overhead rate variance
• Direct labor hour
• Direct labor rate
• Direct labor cost
• Overhead rate
• Overhead cost
• Quantity produced
• Quantity scrapped
• Set-up time
• Production time
• Rework time
• Overtime
• Idle time

Audit Trails

• Provide a Cost Activity History Analysis by commodity/item/production method/facility/product line
• Planned material to actual quantity
• Planned labor to actual labor hours
• Planned labor rate to actual rate
• Planned overhead to actual overhead with volume and rate variance
• Automatically create a labor clearing account to tie to the Labor Distribution File and the Transaction Log.