Ed Gutkowski, Chief Architect - RapidReconciler, Products
Diverse companies often employ a costing strategy that utilizes multiple cost methods in JD Edwards. For example, manufacturing plants primarily use method '07' (standard cost) while distribution centers may use method '02' (weighted average). If your items are valued using multiple cost methods it is easy to overlook some fundamental set up constraints which can lead to variances during the reconciliation process. The culprit in this case is the GL class code. Assigning the same code to items with different cost methods results in a "Catch 22", meaning the accounting instruction configuration can only work for one or the other, not both.
Let's say we receive the same item (RM100A GL class IN10) in 2 facilities on 'OP' type purchase orders for company '00001':
Facility 1 – Northern Manufacturing: Cost Method '07'
Facility 2 – Southern Distribution: Cost Method '02'
There are 3 main DMAAI tables used in the receiving process:
4310 – Inventory Debit
4320 – Received Not Vouchered Credit
4335 – Variance to Standard
The issue will be the configuration of table 4335 as illustrated below.
Table Company OrderType GL Class Business Unit Object Subsidiary
4310 00001 OP IN10 1 1410 Inv
4320 00001 OP IN10 1 1450 RNV
4335 00001 OP IN10 1 ??? ???
The object and subsidiary configuration is going to depend on the cost method of the item being received. If the receipt occurs at Northern Manufacturing, then the object and subsidiary would be a P&L account to expense any purchased part variance. If the receipt is at Southern Distribution, then it would be the inventory account 1410.Inv, as any variance is rolled back into the value for weighted average. As you can see, it can only be set up 1 way, resulting in a dilemma. How do we fix this?
We need to look at the differentiators in the AAI set up. What can be different? There are really only 2 choices: Order type or GL class code. Having separate purchase order types for each facility only works if your transactions are truly that separate. In reality, the only choice is to not use the same GL class code over items with multiple cost types.
Ensuring this division of class codes avoids the "Catch 22" and saves reconciling items from occurring when transactions are processed.
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