Manufacturing companies that use JD Edwards usually update item costs at year end or very early in the New Year. This is accomplished using the cost roll functionality (simulation and freezing) built into the software. One thing that may be overlooked however is the impact, or lack thereof, on any work order that is in process.
When a parts list is attached, component costs (material, labor, overhead etc.) are copied to the work order system. These are the costs that are used when the manufacturing accounting program (R31802A) creates the general ledger entries for any material issues or completions. But, what happens when these costs are out there, and the year end roll up is done?
Unless you launch the WIP revaluation program (R30837), nothing will happen to those open orders. This is what causes spikes in manufacturing variance early in the year. The variance will slowly lessen as those work orders are fully completed. Of course, any new work orders generated AFTER the cost roll will have the updated component costs on them so that variance will not be an issue.
For more information on the WIP revaluation program, please reference your Oracle documentation.
Happy reconciling!
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