Back in December I started this series about the top 6 issues with JD Edwards inventory reconciliation discussing DMAAI’s. In April we continued the series by discussing GL class codes and their potential negative impact on the reconciliation process. In this article, we move on to product costing and how to check setup integrity.
The first topic to cover is the cost component/ledger integrity report R30543. If you are running a standard cost system, each items total/standard cost is made up of several cost components as shown in the image below.
A cost roll up will set the cost ledger cost to the sum of all of the components. In the above example if you all up all of the values in the Simulated Total column, you will get $389 as shown in the Cost Ledger field.
But what happens if the total does not match the sum of the components. How does it impact a reconciliation? Let’s assume for the moment that the cost ledger amount was $400 instead of $389, but all the components stay the same. This can happen if the cost ledger is changed manually without going through the proper roll up procedure. When this part is issued to a work order, the item ledger/cardex will have an entry reflective of the cost ledger amount ($400). When manufacturing accounting runs, however, the general ledger will book by cost component ($389), leaving an $11 discrepancy between the item and general ledgers!
Do you have this scenario on any items in your system? You can check by running the R30543 Cost Component/Ledger integrity report. The report will list all items where the cost ledger does not equal the sum of the components. Re-rolling these items will bring your costs back in line and prevent variances from happening.
It is recommended that cost accountants run this report periodically to ensure there are no issues with product costs. In our next article I will discuss another potential costing issue, WIP revaluation. Until next time … happy reconciling!