A nonscrap completion is any completion that does not record scrap. The Work in Process accrual account is relieved by one of the following methods.
-
Completing one or more of the parent items as originally planned to inventory, another work order, or a sales order.
-
Completing to an item that is different from the originally planned parent (such as a by-product).
The following calculation methods are used for the nonscrap completions:
The Percent of Cost calculation is used for a completion that has a Unit Cost value manually entered. For Actual and Lower of Planned or Actual Cost Completion Methods, the balance in the Work In Process accrual account is used in the Percent of Cost Calculation. The Planned Cost Completion Method uses the Standard Costs in the Percent of Cost calculation.
A completion entry that has a quantity without a Unit Cost follows the calculations based on the Issue Method and Cost Completion Method.
For the following nonscrap completion examples, the quantity available is calculated as:
Quantity Available = Quantity Planned - Quantity Completed - Quantity Scrapped - Quantity Transferred
For the following nonscrap completion examples, use the following information.
Work Order Routing Setup
Step 0000
Work center 1
Operation code 1
Hours/operation 1.00
Operations/parent factor 1
Planned cost $10.00
Fixed 10%
Variable 10%
Step 0010
Work center 2
Operation code 2
Hours/operation 1.00
Parent/operations factor 2
Planned Cost $10.00
Fixed 10%
Variable 10%
Step 0020
Work center 3
Operation code 3
Operations/hour 1.00
Operations/parent factor 2
Work center charge at employee rate selected (employee rate used $20.00)
Planned cost $10.00
Fixed 10%
Variable 10%
Step 0030
Work center 4
Operation code 4
Operations/hour 1.00
Parent/operations factor 1
Work center charge at employee rate selected (employee rate used $20.00)
Planned cost $10.00
Fixed 10%
Variable 10%
Step 0040
Work center 5
Operation code 5
Fixed time lot 1.00
Work center Outside Processing selected
Planned cost $100.00
Fixed 10%
Variable 10%
Standard Costs Calculated Per Step
6 components at $10.00/each (2 components per step)
Step 0000
|
Direct labor
|
$1000.00
|
|
Fixed labor
|
$100.00
|
|
Variable labor
|
$100.00
|
|
|
|
|
Direct material
|
$2000.00
|
|
Fixed material
|
$200.00
|
|
Variable material
|
$200.00
|
Step 0010
|
Direct labor
|
$500.00
|
|
Fixed labor
|
$ 50.00
|
|
Variable labor
|
$ 50.00
|
|
|
|
|
Direct material
|
$2000.00
|
|
Fixed material
|
$200.00
|
|
Variable material
|
$200.00
|
Step 0020
|
Direct labor
|
$2000.00
|
|
Fixed labor
|
$200.00
|
|
Variable labor
|
$200.00
|
|
|
|
|
Direct material
|
$2000.00
|
|
Fixed material
|
$200.00
|
|
Variable material
|
$200.00
|
Step 0030
|
Direct labor
|
$1000.00
|
|
Fixed labor
|
$100.00
|
|
Variable labor
|
$100.00
|
Step 0040
|
Direct outside processing
|
$ 100.00
|
|
Fixed outside processing
|
$ 10.00
|
|
Variable outside processing
|
$ 10.00
|
Work Order Inquiry Summary
|
Total direct labor
|
$4500.00
|
|
Total direct material
|
$6000.00
|
|
Total outside processing
|
$100.00
|
|
Total fixed
|
$1060.00
|
|
Total variable
|
$1060.00
|
|
|
|
|
Grand total
|
$12,720.00
|
Planned Cost Examples
The Planned Cost Completion method for all issue methods uses the Work Order Percent Complete calculation when the completion entry is equal to the originally planned item code.
Work Order % Complete = Completed Quantity / Quantity Planned
If the quantity available is less than zero (negative, meaning an overcompletion), then the last completion for the work order and the unit cost is still calculated using the standard costs. The variance between the total standard costs calculated for the work order original planned quantity and the portion of the completion's extended cost exceeding the total standard costs will be updated to the Work in Process accrual account.
Example 1
Work Order planned quantity = 100
Issue method = Backflush
Cost method = Planned
Completion transaction for quantity of 10
Auto Generate Labor and Auto Generate Out-Process check boxes are selected on the Work Order Entry Additional tab
Completion unit cost = $106.00
Extended cost = $1272.00
Material Issue Transaction
|
Direct
|
$600.00
|
|
Fixed
|
$60.00
|
|
Variable
|
$60.00
|
Labor Transaction
|
Direct
|
$450.00
|
|
Fixed
|
$45.00
|
|
Variable
|
$45.00
|
Outside Processing Transaction
|
Direct
|
$10.00
|
|
Fixed
|
$1.00
|
|
Variable
|
$1.00
|
End result of Work in Process: zero balance
Example 2
Work Order planned quantity = 100
Issue method = Automatic
Cost method = Planned
Completion transaction for quantity of 10
Auto Generate Labor and Auto Generate Out-Process check boxes are selected on the Work Order Entry Additional tab
Transactions are created on update of release transaction
Completion unit cost = $106.00
Extended cost = $1272.00
Material Issue Transaction
|
Direct
|
$6000.00
|
|
Fixed
|
$600.00
|
|
Variable
|
$600.00
|
Labor Transaction
|
Direct
|
$4500.00
|
|
Fixed
|
$450.00
|
|
Variable
|
$450.00
|
Outside Processing Transaction
|
Direct
|
$100.00
|
|
Fixed
|
$10.00
|
|
Variable
|
$10.00
|
End result in Work inProcess: $11,448.00 balance
Example 3
Work Order planned quantity = 100
Issue method = Manual
Cost method = Planned
Completion transaction for quantity of 10
Auto Generate Labor and Auto Generate Out-Process check boxes are selected on the Work Order Entry Additional tab
Transactions are not created for the Manual issue method
Completion unit cost = $106.00
Extended cost = $1272.00
End result in Work inProcess: -$1272.00 balance
In this completion example, a negative balance is created in Work in Process. After-the-fact transactions to offset the negative balance can be applied later. This allows you to update inventory with stock prior to having the data entry completed in Work Order. Using any issue method with Planned cost can have a negative balance if the Auto Generate Labor Transactions check box is cleared in the Work Order Options window.
Actual (Backflush and Manual) Example
The Actual Cost Completion method for a work order created by the Backflush and Manual issue methods relieves 100 percent of all costs in the Work in Process accrual account for each completion if the completion entry is for the originally planned item code.
If the quantity available is equal to or less than zero (negative, meaning an overcompletion), it represents the last completion for the work order and 100 percent of the costs remaining in the Work in Process accrual account are used for the last completion, leaving a zero balance.
Actual (Automatic) Examples
The Actual Cost Completion Method for Automatic issue method uses the Work Order Percent Complete calculation when the completion entry is for the originally planned item code.
Work Order % complete = Completed Quantity / Quantity Planned
When the quantity available is equal to or less than zero (negative, meaning an overcompletion), it represents the last completion for the work order, then 100% of the costs remaining in the Work in Process accrual account are used for the last completion leaving a zero balance.
Example 1
Work Order planned quantity = 100
Issue method = Backflush or Manual*
Cost method = Actual
Completion transaction for quantity of 10
Auto Generate Labor and Auto Generate Out-Process check boxes are selected on the Work Order Entry Additional tab
Transactions are not created for the Lower of Plan/Actual cost method
After the release of the work order the following transactions are entered for labor and outside processing:
Labor Transaction
|
Step 0000
|
Direct
|
$250.00
|
|
|
Fixed
|
$25.00
|
|
|
Variable
|
$25.00
|
|
Step 0010
|
Direct
|
$15.00
|
|
|
Fixed
|
$1.50
|
|
|
Variable
|
$1.50
|
|
Step 0020
|
Direct
|
$400.00
|
|
|
Fixed
|
$40.00
|
|
|
Variable
|
$40.00
|
|
Step 0030
|
Direct
|
$0.00
|
|
|
Fixed
|
$0.00
|
|
|
Variable
|
$0.00
|
Outside Processing Transaction
|
Step 0040
|
Direct
|
$150.00
|
|
|
Fixed
|
$15.00
|
|
|
Variable
|
$15.00
|
*Completion entry creates the Material Issue automatically for Backflush. For the Manual issue method, this example assumes that a material transaction for a quantity of 10 of each component is entered and updated simultaneous with the completion entry.
Total material costs = $720.00
Total labor/outside processing costs = $978.00
Extended cost = $1698.00
Completion unit cost = $169.80
End result in Work inProcess: zero balance
Example 2
Work Order planned quantity = 100
Issue method = Automatic
Cost method = Actual
Completion transaction for quantity of 10
Auto Generate Labor and Auto Generate Out-Process check boxes are selected on the Work Order Entry Additional tab
Transactions are not created for the Lower of Plan/Actual cost method
After the release of the work order, all the material quantities are issued and costs updated to Work in Process. The following transactions are entered for labor and outside processing:
Material Transaction
|
Step 0000
|
Direct
|
$2000.00
|
|
|
Fixed
|
$200.00
|
|
|
Variable
|
$200.00
|
|
Step 0010
|
Direct
|
$2000.00
|
|
|
Fixed
|
$200.00
|
|
|
Variable
|
$200.00
|
|
Step 0020
|
Direct
|
$2000.00
|
|
|
Fixed
|
$200.00
|
|
|
Variable
|
$200.00
|
Labor Transaction
|
Step 0000
|
Direct
|
$250.00
|
|
|
Fixed
|
$25.00
|
|
|
Variable
|
$25.00
|
|
Step 0010
|
Direct
|
$15.00
|
|
|
Fixed
|
$1.50
|
|
|
Variable
|
$1.50
|
|
Step 0020
|
Direct
|
$400.00
|
|
|
Fixed
|
$40.00
|
|
|
Variable
|
$40.00
|
|
Step 0030
|
Direct
|
$0.00
|
|
|
Fixed
|
$0.00
|
|
|
Variable
|
$0.00
|
Outside Processing Transaction
|
Step 0040
|
Direct
|
$150.00
|
|
|
Fixed
|
$15.00
|
|
|
Variable
|
$15.00
|
Completion unit cost = $81.78
Extended = $817.8
Total material costs = $720.00
Total labor/outside processing costs = $97.80
Extended cost = $817.80
End result in Work inProcess:$7360.20 balance
Lower of Plan/Actual (Backflush, Manual, and Automatic) Examples
The Lower of Planned or Actual Cost Completion method for all issue methods compares the standard costs with the Work in Process costs in the accrual account to determine which is lower.
The comparison performed for material, labor, and outside processing costs is shown in the following steps.
-
The Work Order Percent Complete calculation is performed for the Planned Cost for each step.
-
If the Work Order Percent Complete calculation determines that the Planned Material cost on a step is $100.00 and the Work in Process accrual account for material on this same step is $110.00, then the $100.00 is relieved from the Work in Process accrual account leaving a balance of $10.00 for material on that step. This also applies to work orders created by the Backflush, Automatic, or Manual issue methods. (See the Planned Cost Examples.)
If the Work Order Percent Complete calculation determines that the Planned Material cost on a step is $100.00 and the Work in Process accrual account for material on this same step is $90.00, then work orders created by the Backflush and Manual issue methods will relieve $90.00 from Work in Process for this step leaving a zero balance for material for that step. If the issue method is Automatic, then the Work Order Percent Complete calculation is performed on the $90.00 and may leave a non-zero balance in the Work in Process accrual account. (See the Actual (Backflush) Example and Actual (Automatic and Manual) Examples.
-
When the quantity available is equal to or less than zero (negative, meaning an overcompletion), it represents the last completion for the work order and 100% of the costs remaining in the Work in Process accrual account are used for the last completion, leaving a zero balance.
Example 1
Work Order planned quantity = 100
Issue method = Backflush or Manual*
Cost method = Lower of Planned or Actual
Completion transaction for quantity of 10
Auto Generate Labor and Auto Generate Out-Process check boxes are selected on the Work Order Entry Additional tab
Labor Transaction
|
Step 0000
|
Direct
|
$250.00
|
|
|
Fixed
|
$25.00
|
|
|
Variable
|
$25.00
|
|
Step 0010
|
Direct
|
$15.00
|
|
|
Fixed
|
$1.50
|
|
|
Variable
|
$1.50
|
|
Step 0020
|
Direct
|
$400.00
|
|
|
Fixed
|
$40.00
|
|
|
Variable
|
$40.00
|
|
Step 0030
|
Direct
|
$0.00
|
|
|
Fixed
|
$0.00
|
|
|
Variable
|
$0.00
|
Outside Processing Transaction
|
Step 0040
|
Direct
|
$150.00
|
|
|
Fixed
|
$15.00
|
|
|
Variable
|
$15.00
|
*Completion entry creates the material issue automatically for the Backflush issue method. For the Manual issue method, this example assumes that a material transaction for a quantity of 10 for each component is entered and updated simultaneous with the completion entry.
Completion unit cost = $111.00
Extended cost = $1110.00
How the extended cost was calculated:
(If Actual is selected for the step see Actual (Backflush) Example for the similar issue method)
Labor/Outside Processing
Step 0000 Planned cost lower
Standard Cost for quantity 100 = $1000 * 10% completed = $100
$100 < $250
Step 0010 Actual cost lower
Standard Cost for quantity 100 = $500 * 10% completed = $50
$15 < $50
Step 0020 Planned cost lower
Standard Cost for quantity 100 = $2000 * 10% completed = $200
$200 < $400
Step 0030 Actual cost lower
Step 0040 Planned cost lower
Standard Cost for quantity 100 = $100 * 10% completed = $10
$10 < $150
Total material costs = $ 720.00
Total labor/outside processing costs = $ 390.00
Extended cost = $1110.00
End Result in Work inProcess: $588.00 balance
Example 2
Work Order planned quantity = 100
Issue method = Automatic
Cost method = Lower of Plan/Actual
Completion transaction for quantity of 10
Auto Generate Labor and Auto Generate Out-Process check boxes are selected on the Work Order Entry Additional tab
Material Transaction
|
Step 0000
|
Direct
|
$2000.00
|
|
|
Fixed
|
$200.00
|
|
|
Variable
|
$200.00
|
|
Step 0010
|
Direct
|
$2000.00
|
|
|
Fixed
|
$200.00
|
|
|
Variable
|
$200.00
|
|
Step 0020
|
Direct
|
$2000.00
|
|
|
Fixed
|
$200.00
|
|
|
Variable
|
$200.00
|
Labor Transaction
|
Step 0000
|
Direct
|
$250.00
|
|
|
Fixed
|
$25.00
|
|
|
Variable
|
$25.00
|
|
Step 0010
|
Direct
|
$15.00
|
|
|
Fixed
|
$1.50
|
|
|
Variable
|
$1.50
|
|
Step 0020
|
Direct
|
$400.00
|
|
|
Fixed
|
$40.00
|
|
|
Variable
|
$40.00
|
|
Step 0030
|
Direct
|
$0.00
|
|
|
Fixed
|
$0.00
|
|
|
Variable
|
$0.00
|
Outside Processing Transaction
|
Step 0040
|
Direct
|
$150.00
|
|
|
Fixed
|
$15.00
|
|
|
Variable
|
$15.00
|
Completion unit cost = $81.18
Extended cost = $811.80
How the extended cost was calculated:
(If Actual is selected for the step see Actual cost examples for the similar issue method)
Labor/Outside Processing
Step 0000 Actual cost lower
Standard Cost for quantity 100 = $1000 * 10% completed = $100
Actual Cost for quantity 100 = $250 * 10% completed = $25
$25 < $100
Step 0010 Actual cost lower
Standard Cost for quantity 100 = $500 * 10% completed = $50
Actual Cost for quantity 100 = $15 * 10% completed = $1.50
$1.50 < $50
Step 0020 Actual cost lower
Standard Cost for quantity 100 = $2000 * 10% completed = $200
Actual Cost for quantity 100 = $400 * 10% completed = $40
$40 < $200
Step 0030 Actual cost lower
Step 0040 Planned cost lower
Standard cost for quantity 100 = $100 * 10% completed = $10
Actual cost for quantity 100 = $150 * 10% completed = $15
$10 < $15
Total material costs = $720.00
Total labor/outside processing costs = $91.80
Extended cost = $811.80
End result in Work in Process: $7366.20 balance
By Product Completion (Quantity Only) Examples
Nonscrap completions for an alternate item number (by-product), which have a parent quantity value and a quantity value over zero, use the Work Order Percent Complete calculation method.
By-Product Completion Entry with a quantity > 0 and a parent quantity > 0:
Example 1
If the quantity (by-product) entered is 1 and the parent (original item) quantity is 2, the Work Order Percent Complete method calculates a unit cost of $1000.00 and an extended cost of $1000.00. The Completion Register will have a unit cost of $1000.00 and an extended cost of $1000.00.
Example 2
If the quantity (by-product) entered is 2 and the parent (original item) quantity is 1, the Work Order Percent Complete method calculates a unit cost of $250.00 and an extended cost of $500.00. The Completion Register will have an extended cost of $500.00. The unit cost for each product item is $250.00.
By Product Completion (Quantity and Unit Cost) Example
All three Cost Completion methods for nonscrap completions use an alternate item number (by-product) if the parent quantity is zero, and if a quantity and unit cost use the Percent of Cost calculation method.
The Percent of Cost calculation method determines the amount of Work in Process dollars to relieve for each step record for Actual and the Lower of Planned or Actual Cost Completion methods.
Unit Cost entered * Quantity = Total Cost
Total Cost / Total Outstanding Work In Process Dollars = % relieved from each step
For the Planned Cost Completion method, the Percent of Cost calculations are:
Unit Cost entered * Quantity = Total Cost
Standard Costs - (WIP debit WIP credit) = Total Outstanding WIP
Total Cost / Total Outstanding Work in Process Dollars = % Relieved from Each Step
For more information, see:
Scrap Completions
Completion Calculations
Costing Methods for Unit Cost of Completion Entry
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