Scrap Cost Calculation: Generated Transactions
If the system is configured so that scrap costs are posted to a specific GL account or a scrapped quantity is moved to a specific warehouse, when you process production orders and the related transactions to record scrap costs, the system also updates GL balances. Details about the transactions are described in the following sections.
Transactions Generated for Written-Off Scrap Costs
When a scrap action for an operation of a production order is Write Off and a shop-floor employee enters the scrap quantity in a labor transaction on the Labor (AM301000) form or a move transaction on the Move (AM302000) form, the system creates a WIP adjustment transaction on the WIP Adjustment (AM308000) form to move the scrap cost from the Work in Process GL account to a Scrap Expense GL account. For this transaction, the system generates a batch of the general ledger transactions shown in the following table.
| Account | Source of Account | Debit | Credit |
|---|---|---|---|
| Scrap Expense | The reason code for scrap on the Reason Codes (CS211000) form | Amount | 0.00 |
| Work in Process | The posting class settings on the Posting Classes (IN206000) form | 0.00 | Amount |
You can view the reference number of the GL batch in the GL Batch Nbr column (which is hidden by default) on the WIP Adjustment form.
Transactions Generated for Quarantined Scrap
When a scrap action for an operation of a production order is Quarantine and a shop-floor employee enters the scrap quantity in a labor transaction on the Labor (AM301000) form or a move transaction on the Move (AM302000) form, the system creates the following transactions:
- A WIP adjustment transaction on the WIP Adjustment (AM308000) form to move the scrap cost from the Work in Process GL account to a Scrap Expense GL account
- An inventory receipt transaction on the Receipts (IN301000) form to record the movement of the scrapped items from the shop floor to the warehouse and warehouse location specified in the labor or move transaction.
For the movement of the scrap cost, the system generates a batch of the general ledger transactions shown in the following table.
| Account | Source of Account | Debit | Credit |
|---|---|---|---|
| Scrap Expense | The reason code for scrap on the Reason Codes (CS211000) form | Amount | 0.00 |
| Work in Process | The posting class settings on the Posting Classes (IN206000) form | 0.00 | Amount |
You can view the reference number of the GL batch in the GL Batch Nbr column (which is hidden by default) on the WIP Adjustment form.
For the movement of the scrapped quantity to a warehouse, the system generates a batch of the general ledger transactions shown in the following table.
| Account | Source of Account | Debit | Credit |
|---|---|---|---|
| Inventory Asset | The posting class settings on the Posting Classes form | Amount | 0.00 |
| Scrap Expense | The reason code for scrap on the Reason Codes form | 0.00 | Amount |
You can view the reference number of the GL batch on the Financial tab of the Receipts form.
If a cost of a production order is calculated by using the Standard costing method, the system generates a batch of the general ledger transactions for the movement of the scrapped quantity to a warehouse, as shown in the following table.
| Account | Source of Account | Debit | Credit |
|---|---|---|---|
| Inventory | The posting class settings on the Posting Classes form | Scrap cost calculated by using the standard item cost | 0.00 |
| Standard Cost Variance | The posting class settings on the Posting Classes form | Variance between the scrap cost in the production order and the scrap cost calculated by using the standard item cost | 0.00 |
| Scrap Expense | The reason code for scrap on the Reason Codes form | 0.00 | Scrap cost applied to a production order |
You can view the reference number of the GL batch on the Financial tab of the Receipts form.