Fiscal year end is approaching and your business objective is to process all reported activity for Work Orders during the current fiscal year to result in a 'balanced' cutover in Manufacturing Accounting, and, start the new fiscal year with new costs for new WO activity reporting.
When and the frequency to change frozen manufacturing and inventory costs is a business decision. However, bad timing in the execution of the final cost change could create unwanted WIP variances and imbalances between inventory values and the corresponding accounts in the General Ledger.
Unwanted and unexpected Work Order Variances, (Planned, Actual and Other) can be produced due to frozen cost changes done to items in ‘open’ Work Orders. So, it is clear now that before a cost update first you need to process open and partially completed work orders that have pending accounting activity not yet reported in the books (unaccounted units).
By generating and posting these transactions, before a final cost change, you’ll process the manufacturing journal entries at the same cost that was used to report the work order hours and your inventory activity in the Cardex. Manufacturing Accounting will clear the unaccounted fields and the Work Order Production file will be ready to be used by the Work Order Variances program to generate the calculated IV transactions.
It never hurts to review, re-evaluate or change the steps of your yearly process. It is a good opportunity for brainstorming and sharing some best practices and considerations with your team. Many of the steps delimited you may already be familiar with when you upgraded. The main objective was and is to ensure a ‘clean’ cutover in Manufacturing Accounting. Review our previous blog Upgrade Best Practices for Discrete Work Orders – JD Edwards World as well as section "Planning a Mass Cost Update" in Standard Cost Simulation (P30820), Cost Update (P30835) and WIP Revaluation (P30837) in A8.1, A9.1 Onward (Doc ID 1541652.1).
Remember, a ‘closed work order’ term and status in manufacturing is driven by the value updated in field Variance Flag (PPFG) stored in the Work Order Header file. Yes, the Work Order status plays a role too as it informs users what stage has been completed during the work order activity reporting. However, the manufacturing accounting programs and some reports will validate the PPFG value to confirm if a WO has been fully completed, processed and ‘closed’ in the General Ledger. While the WO status field in the header can be easily changed by a user aside programs setup to do so, if the variance flag is not set to a closed status, for the system this order is still considered open and active, even if the status in the header is 99. For a better understanding of this concept, review Purpose of the Variance Flag (PPFG) In Manufacturing (Doc ID 661187.1).