Rootstock Manufacturing Cost Control provides extensive cost accounting capabilities required by companies that have a need to closely monitor and control manufacturing costs. The user may elect to use either standard costing or moving average costing method for valuing inventory and computing cost of goods sold.
Eight (8) cost elements can be maintained using either a standard cost method or moving average cost method. The method is set at the ‘division level’ which means that in a multi-division installation, a company could have ‘standard costs’ in one division and ‘moving average costs’ in another division. Another item of note is that in a standard cost system these costs are maintained at an item level and in an moving average cost system these costs are ‘averaged’ at an item-project level.
Up to eight cost elements can be tracked in inventory, work in process and finished goods. These cost elements are as follows:
Cost Rollups and Standards Revaluation in a Standard Cost Environment
Standard costs for purchased and subcontract items are maintained by the user on the item standard cost master file. The standard costs for labor and overhead are calculated by Rootstock using the bill of materials and routing for each item using the cost rollup process.
Variance Calculations in a Standard Cost Environment
In a standard cost environment, the costs on the item (or item-project) master files are maintained at standard. Standard cost variance calculations are done as follows on the following transactions:
Rootstock’s Manufacturing Accounts
Rootstock Manufacturing Cost Control maintains its own chart of manufacturing accounts which are then individually mapped to the General Ledger account. This permits the user to capture costs at one level of detail in manufacturing (e.g. multiple variance accounts), and then post these accounts to the same General Ledger account. The format of the costs to be posted to General Ledger is in the cumulative cost format and the eight cost components (whether in a standard or moving average cost environment) are ‘unitized’ as one cost for General Ledger purposes.
Rootstock Multi Division, Multi Site, & Multi Company capability offers a sophisticated structure to support manufacturing and distribution companies that have multiple plants or distribution centers in various locations throughout the world. Rootstock provides comprehensive inter-division and inter-site capabilities throughout all applications.
Within Rootstock, multiple divisions may exist within a single company while multiple sites exist within a single division. Each site maintains its own inventory and a site in Rootstock is typically identified with a warehouse. Forecasting and MRP functions can also exist separately for each site (or across sites) to satisfy inter-site requirements. Each Division has a ‘main site’ and it is that main site that does the manufacturing and purchasing while the other sites can be warehouses.
Inter-Site Requirements Planning allows a supply site to plan, acquire and transfer material to meet the needs of a requiring site. Materials that are manufactured, purchased or subcontracted at the main site can be transferred to the requiring site. A central sales site enters orders for products coming from other sites, such as warehouses and manufacturing plants.
Production Engineering can be centralized within a company as well as all of the divisions within a company. If the Engineering function is decentralized at the plant level, then each division will have its own Production Engineering Bill of Material and Change Order Process.
In a company that supports centralized Production Engineering and Product Management, each manufacturing division that maintains information such as product masters, item masters, and bills of materials (if applicable) may share the data, rather than duplicating it at each division. Work orders and other inventory functions can be validated against centralized master records at the inventory divisions. Each division can maintain their own ‘sub ledger’ of cost accounts that can be rolled up into the main ledger for a company’s financial statements. The costs can then be identified and controlled at a division level from a general accounting perspective.
Rootstock Project Control provides an additional capability to the inventory control tracking, as well as planning and costing of items. In a project control environment not only does the manufacturer or distributor want to control and plan material purchases, manufacturing, and inventory for the division but also wants to additionally identify inventories and costs by project.
The Rootstock Project Workbench is the focal point for Project information. The Project Workbench provides a real-time interactive access to all Project data including a snapshot of the actual costs to date compared to the Budget costs. This data also includes project inventory, PO requisitions, manufacturing work orders, forecasts, sales orders, and all transaction associated to the project.
In a discrete manufacturing operation where all planning, costing and tracking is ‘item number’ based, there is typically an additional requirement in a manufacture to order, assemble to order, engineer to order or even contract manufacturer – and that is to plan, cost and track by ‘item within a project’.
To meet these needs, Rootstock Project Control provides these additional capabilities of planning, tracking and costing within the Rootstock manufacturing modules of:
The Project Control module also enables identification of a project to Purchase Order and Sales Order lines.
Rootstock Project Control therefore associates inventory items, sales orders, work orders, purchase requisitions, and purchase orders with a project. Material Requirements Planning (MRP) can plan either by a single project – or by all of the projects within a division. Usually in every project environment there are common parts across projects. These common parts can be identified as such on the inventory item master (or on the commodity code) as common parts (or other terms used in the industry include company inventory or ‘global parts’ or ‘home project parts’).
Rootstock Project Control not only allows users to determine how materials are allocated to specific projects but the cost method can be either standard or average costs. If the cost method is average cost then the cost is identified at the item-project level. If the cost method used is standard cost, then all projects within a division will share the same standard cost.
In a project control environment, cost accounts for inventory and cost of sales can be designated by project. This allows the business to look at financial reports with a project accountant’s view. For those firms that have few customers and large portions of their business are allocated to these few, then this capability is helpful. In the case of a job shop which may have hundreds of customers (and many one time only customers) yet function as a ‘to order’ business, the cost accounts can be identified at the commodity code or item level and this delineation of project accounts is not necessary at the General Ledger.
With Rootstock, each manufacturing work order and purchase order line item is associated with an individual project. This allows a user to access online Project Status information at any point during the life cycle of a project. Entering a project, the user receives immediate online information in the Project Work Bench regarding purchase requisitions, purchase orders, work orders, sales order, cost transactions, and inventory.