PRODUCTION CONTROL GENERAL LEDGER POSTING LOGIC

When goods are being manufactured the inventories of raw materials and sub components are being reduced. The G/L must reflect this as well as reflecting the final finished goods or components inventories when they are completed.

The following is a summarized version of the General Ledger (G/L) postings that occur throughout the manufacturing process. For a detailed breakdown of where the G/L accounts used are located and the cost amount posting calculations see Production Control - Detail

When entering any type of material usage entry:

Job Material Usage Entry – PC3100
Automatic Material Usage Confirmation – PC3200
Material Usage Correction – PC3600

The corresponding G/L transactions are as follows:

Debit -	Work in Progress (WIP) material control account based upon the reason code, warehouse combination with the cost of the item.
Credit -	Inventory control account based upon the reason code, warehouse combination with the cost of the item.

When entering labour:

Labour Usage Entry – PC4100

The corresponding G/L transactions are as follows:

Debit -	Work in Progress (WIP) labour control account on the Work Center Maintenance – SR0300 with the labour cost.
Credit -	Labour Recovery control account on the Work Center Maintenance – SR0300 with the labour cost.

When doing any type of Job confirmation:

Manual Job Confirmation – PC5100
Automatic Job Confirmation – PC5200

The corresponding G/L transactions consist of a debit transaction with multiple corresponding and offsetting credit transactions as follows:

Debit -

Inventory control account based upon the reason code, warehouse combination with the cost of the manufactured item.

For every active component in the structure of the manufactured item:

Credit -

Work in progress (WIP) material control account based upon the reason code, warehouse combination with the cost of the component based upon required component quantities.

For every operation (based upon the Routing File Maintenance – SR1200) involved in producing the manufactured item:

If the System Flags - gb2800 Labour Usage set to 'Manual' or 'Automatic' then:

Credit - Work in progress (WIP) Labour control account on the work center maintenance – SR0300 with the labour cost amount

If the System Flags - gb2800 Labour Usage set to 'None' then:

Credit - Labour Recovery account on the work center maintenance – SR0300 with the labour cost amount

If the Overhead Recovery account on the Work Centre is set up AND is different from the Labour Recovery account then the overhead cost portion (fixed and variable) of the cost amount are posted:

Credit -

Overhead Recovery account on the work center maintenance – SR0300 with the fixed and variable cost amounts

If the amount debited to the inventory control account is not equal to the total amount credited to the work in progress inventory and labour accounts. (Either because of rounding issues or because the standard cost of manufactured item has not been updated with the latest changes to the structure and routing files). The difference is posted to the material variance account based upon the reason code for the product group that the manufactured item belongs to.

Job Variance G/L Posting - PC5600

The Job Variance G/L Posting update program is used for posting material and labour variances to the G/L variance accounts. The Job and all of its sub jobs must be done and confirmed. If any dollar amount still exists in the work in progress (WIP) labour and work in progress (WIP) material accounts for this job the corresponding G/L postings will be as follows:

Debit -

Either material variance account based upon the reason code
or labour variance account from the work centre – SR0300 with the variance amount.

Credit -

Either Work in progress (WIP) material control account based upon the reason code
or Work in progress (WIP) labour variance account from the work centre – SR0300 for the variance amount

(Material variance control account is found in the Reason Code Master Maintenance – GB4300 under ‘Variances’)
(WIP material control account is found in the Reason Code Master Maintenance – GB4300 under ‘Clearing’)