Report Spotlight - The Work In Process (WIP) Financial Report
What’s the value of the work currently on your shop floor? The WIP Financial Report answers exactly that question. Take a closer look at the settings and best practices for this essential report.
What’s the value of the work currently on your shop floor? The WIP Financial Report answers exactly that question. Take a closer look at the settings and best practices for this essential report.
The Work in Process (WIP) Financial report provides a valuation for all production orders captured by the report that have time, material, direct purchase or subcontract transactions recorded against them. Transactions can be included based on a specific cut-off date. This report can also generate the Work in Process posting to the General Ledger.
As its name implies, the WIP Financial Report is all about dollar values. It’s relative, the WIP Manufacturing Report focuses on the amount of time tracked and quantities of material pulled.
The WIP Financial Calculation takes a snapshot of the financial value of the WIP as of the defined transaction or cut-off date. The WIP valuation is periodic and prompts for a reversal date when posting to the General Ledger.
This calculation/report is typically run at the end of the reporting period, after all production reporting has been completed in the system.
We recommend the following as best practices prior to generating the calculation to ensure that the calculation accurately reflects WIP values.
- All related transactions for the WIP reporting period should be posted.
- All eligible partial and full job closes should be completed.
- Estimates should be reasonable. This avoids large adjustments between partial and full job closes.
Here’s a walk through of the report’s parameters.
The report is found under Production Control | Calculations | Work In Process Calculations | WIP Financial Calculation. There are currently 27 sort options available for up to 3 levels of sorting. The display of headings and totals for each sort level can be controlled independently.
Commonly used Sort Options are:
Job Status: this would allow you to see separate WIP values for In Process, Partial Complete and On Hold separately.
Location: if you have multiple locations, you can see separate WIP values for each location.
Item Number: allows you to see total WIP values for each Inventory Item.
Planner ID: allows you to see WIP values based on planning responsibility.
Sales Order: if production orders are linked directly to Sales Orders, this sort option would allow you to see the value of WIP for each Sales Order.
WIP Class: supports the value of WIP for each defined WIP Class.
The report is made up of a main report section and a recap at the end of the report.
You can choose to only print the Recap for the report which would give you a "totals only" view of the report. Don’t forget to select a Grand Total for the report so that you get a total value for the WIP.
Which format of the report would you like to run? There are 3 formats available for the report – Summary, Journal and Details. Samples of each format are included at the end of this post.
The Summary Report presents the total WIP costs for each job broken down by the WIP Elements: material, labor, labor overhead, work center, work center overhead, direct purchases and subcontracts.
The Journal Entry outlines the journal entry to be posted to the General Ledger. The lowest level of detail on the Journal Entry is the account number. No specific job information is presented on the Journal Report.
The Details Report provides the cost element detail supporting the totals on the Summary and Journal Entry reports. Information includes cost type, sequence, sequence status, work center / labor activity, work center / labor charge rate for setup and runtime, actual dollars for setup and run time and total WIP costs. For materials, direct purchases and sub-contract detail there is item number, quantity, UOM and unit cost.
Transaction Selection Options
Print Only or Print and Post? Controls whether the WIP calculation is posted to the General Ledger. Print Only will generate the report based on the selection criteria. Print and Post will generate the report, create a journal and reversing entry for the accounting system and write the batch to WIP History.
Transactions Posted on or Before: determines the transaction cut-off date for inclusion in the WIP calculation.
Apply Date for Journal Entry: determines in which fiscal period the WIP journal will be posted. The default is the end of the fiscal period. The timing of the calculation may require an update to reflect the appropriate period.
Apply Date for Reverse Entry: determines in which fiscal period the WIP reversal entry will post. The default is the end of the fiscal period plus 1 day.
Allow post if unposted transactions exist? controls whether the journal entry can be posted to the General Ledger if there are unposted transactions for the production jobs included in the calculation.
Print unposted transaction list? If selected, all unposted job-related transactions will appear on the report.
The next 4 Specified Range screens allow you to enter selection criteria to determine which jobs are included in the calculation.
For example, you could generate the calculation only for those jobs that are Partial Complete or On Hold by filtering on the Job Status field.
Suggestion: When you’ve finished defining the parameters for the calculation, click the Save button and assign a name that’s descriptive of the settings.
Next time you wish to run the same calculation, simply select the Saved Parameter Set from the main parameter screen.
Here’s a sample of the Summary and Journal version of the report. The WIP Values for each Job are summarized in the upper portion of the report and the Journal with Debits and Credits to GL Accounts is outlined in the lower portion.
Please note that values for WIP Materials is included in the Summary and Detailed version of the report but not in the Journal because the GL transactions for WIP Material are created with every Pull and Return Material transaction.
Here’s the Detailed Version of the report. It shows the breakdown supporting the values in the Summary Report.
Tip: If you forget to print the report before posting, you can always find the batch in Production Control | History| Work In Process Calculation History. Locate the Batch and reprint the report.
Negative WIP on Partially Closed Jobs
If you perform partial closes on jobs and there are large differences between your estimate and your actual, you will get some unusual results in your WIP Calculation. When a partial close is performed, the estimated cost is used to value the partial quantity and to relieve WIP. If your actual is lower than your estimate you will get a negative value for WIP for that job. Check to make sure that all actual transactions have been posted for the job. The balances will be adjusted when the job is fully closed.
