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 the General Ledger (G/L) postings that occur throughout the manufacturing process.

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. (WIP material control account is found in the Reason Code Master Maintenance – GB4300 under ‘Clearing’)
Credit -	Inventory control account based upon the reason code, warehouse combination with the cost of the item. (Inventory control account is found in the Reason Code Master Maintenance – GB4300 under ‘Inventory’)

Reason Code is defined to the product group that the product belongs to
See Product Group Master Maintenance (IN1000),
Reason Code Master Maintenance (GB4300)

Detail breakdown of how the cost of the item is determined:
The legend below shows the maintenance application where the
Information in the cost of item calculation comes from.

Legend a = Stock File Maintenance (IN0200)
	b = Job Material Usage Entry (PC3100) or
		Automatic Material Confirmation (PC3200) or Material Usage Correction (PC3600)

Cost of Item = a.standard cost *
		b.calculated or entered quantity issued in the application / a.cost price per

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.

(Both accounts above are found in the Work Center Master Maintenance – SR0300 under the ‘Account Information’)

Detail breakdown of how the labour cost of the item is determined:
Legend below shows the maintenance application where the
Information in the labour cost calculation comes from.

Legend: a = Labour Usage Entry (PC4100)
	b = Employee Maintenance (GB0090)
	c = Work Centre Maintenance (SR0300) or
	Global File Maintenance (GB0100)

Labour Cost = a.time * (b.employees rate + c.variable overhead rate) +
	a.time * b.employees rate * c.fixed overhead percent / 100

Employee Rates are found in the Employee Master Maintenance – GB0090 under ‘Rates Information’. Rate is regular rate, overtime rate 1 or overtime rate 2 depending on rate code entered in pc4100. Also if a shift code of 1 or 2 is used shift differential rate 2 or 3 is added to the rate retrieved from the rate code.

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.

(Inventory control account is found in the Reason Code Master Maintenance – GB4300 >under ‘Inventory’)

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.

Reason Code is defined to the product group that the product belongs to
See Product Group Master Maintenance (IN1000),
Reason Code Master Maintenance (GB4300)

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

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 an/or 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’)

Detail Breakdown of item and component cost calculations used in the Job Confirmation postings above:

Detail breakdown of how the cost of the manufactured item is determined:

The legend below shows the maintenance application where the
Information in the cost of manufactured item calculation comes from.

Legend: a = Stock File Maintenance (IN0200)
	b = Manual Job Confirmation (PC5100) or
	Automatic Job Confirmation (PC5200)

Cost of manufactured Item = a.standard cost of item *
	b.calculated or entered quantity issued in the application a.cost price per

Detail breakdown of how the cost of the component is determined:
Legend below shows the maintenance application where the
Information in the calculation comes from.

Legend: a = structure file maintenance (SR0500)
	e = stock file maintenance (IN0200) g = automatic job confirmation (PC5200)

Cost = (a.component quantity * (1 + a.scrap percent / 100)) *
	(a.structure quantity / g.confirmed quantity) * (e.standard cost / e.cost price per)

Detail breakdown of how the labour cost is determined:
Legend below shows the maintenance application where the
Information in the calculation comes from.

Legend: b = work centre maintenance (SR0300)
	a = routing file maintenance (SR1200) c = work centre maintenance or if value is blank global file maintenance (SR0300 or GB0100) e = automatic job confirmation (PC5200)

Cost = ((b.labour rate * a.number of men * a.labour time / a.labour quantity +
	b.set up rate * a.number of men * a.set up time / a.set up quantity + b.variable overhead rate * a.number of men * (a.labour time / a.labour quantity + a.set up time / a.set up quantity) + c.fix overhead percent / 100 * a.number of men * (b.labour rate * a.labour time/ a.labour quantity + b.set up rate * a.set up time/a.set up quantity)) * e.confirmed quantity

Overhead Cost = b.variable overhead rate * a.number of men *
	(a.labour time / a.labour quantity + a.set up time / a.set up quantity) + c.fix overhead percent / 100 * a.number of men * (b.labour rate * a.labour time/ a.labour quantity + b.set up rate * a.set up time/a.set up quantity)) * e.confirmed quantity