Costing Methods for Unit Cost of Completion Entry

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Use the following costing methods to determine the unit cost of a completion entry:

Actual Cost Method for Completion Entry

All Work Order and Purchase Order receipt transactions with line items assigned a work order number that are updated to the Work in Process accrual account are used for calculating the completion entry's unit cost. A completion transaction uses the total outstanding Work in Process to calculate the unit cost. When the work order is fully completed or over completed, the remaining costs in the Work in Process accrual account are allocated and a zero balance is left in the Work in Process accrual account.

The Work in Process Recap Report provides the current total outstanding Work in Process.

Lower of Planned or Actual Cost Method for Completion Entry

For each work order step, the completion transaction evaluates whether the calculated unit cost is lower using the standard costs or the actual costs in the Work in Process accrual account. The minimum cost is used for the completion entry and is relieved from Work in Process. Actual costs in Work in Process are updated by Work Order transactions and Purchase Order receipt transactions when line items are assigned a work order.

Planned Cost Method for Completion Entry

With the Planned Cost Completion method, standard costs are calculated when the work order is created. These costs are used to calculate the completion unit cost. The Work in Process balance contains only variances, and the standard costs are used for completion entries, keeping the unit costs the same for each completion entry.

For more information, see:

Work Order Options

Work Order Entry

Nonscrap Completions