OperationsManufacturing

Manufacturing with shop stages and actual cost

A production order is broken down into shop stages, together with in-house semi-finished goods. Materials are transferred to production, and output is recorded in its own document. In the month-end close every output batch receives its actual cost, taking work in progress and process stages into account.

What is inside

  1. 01

    Shop stages with semi-finished goods

    An order is broken down level by level into shop stages, including in-house semi-finished goods. The batch is rounded up to the minimum batch size. Orders are ranked by priority, and a stage moves through “formed”, “handed over”, “started” and “completed”.

    Production stage in progress with partial output
  2. 02

    Actual cost for every output batch

    In the month-end close, fixed production overheads are allocated by normal capacity, and auxiliary shop costs are transferred. Every output batch receives its actual cost, and finished goods sold in the same month are revalued at that cost. All of it runs in one transaction.

    Output cost step of the month-end close with cost allocation and work in progress
  3. 03

    Multiple process stages

    The cost of a semi-finished product passes from stage to stage until it reaches finished goods. If the stages form a closed loop, the close stops and explains why.

  4. 04

    Work in progress from open stages

    Work in progress is declared from open stages with the “Declare from stages” action. Labour can be counted by standard or by work done. By-products and recoverable waste are valued at output.

  5. 05

    Made to order

    Product parameters are defined in the item type, and material norms in the bill of materials are formulas based on those parameters. The values, such as measurements, come from the customer order line.

What the module includes

  • Production orders
  • Production stages
  • Production reductions
  • Material transfers to production (and returns from the shop)
  • Production output
  • Bills of materials
  • Costing items
  • Work types with rates
  • Production priorities
  • Normal department capacity
  • Material requirements
  • Opening work in progress

Frequently asked questions

When do we see the actual cost of our products?

After the month-end close. The close allocates costs, gives every output batch its actual cost and revalues same-month sales of finished goods at that cost.

Are in-house semi-finished goods included?

Yes. An order is broken down into stages together with semi-finished goods, and their cost passes through the process stages into finished goods.

How is work in progress determined?

It is declared from open stages with the “Declare from stages” action. Labour is counted by standard or by work done.

Can a material norm be a formula?

Yes. For made-to-order products the norm in the bill of materials is a formula based on product parameters, such as measurements.