This chapter reviews period end procedures associated with WIP-based product costing.
No formal closing process is required
DBA does not have a formal period end closing process. We recommend that you run two processes at period end -- the Financial Cutoff Date and Reconcile Book Values.
Update the Financial Cutoff Date
At each period end, we recommend that you go to the Financial Cutoff Date screen and update the financial cutoff date to prevent financial transactions from being made to the prior period.
Run Reconcile Book Values
At each period end, use the Reconcile Book Values screen to adjust total inventory value to account for decimal rounding discrepancies between inventory transaction costs, which are made with five decimal places, and GL posting amounts, which are made with two decimal places.
Never make journal entry adjustments to your Inventory account
Never make journal entry adjustments to your Inventory account. This account is self-adjusting and is always fully reconciled with the total inventory value of stock on hand.
Never make journal entry adjustments to your Work in Process account
Never make journal entry adjustments to your Work in Process account. This is a self-adjusting account that is always fully reconciled with underlying job costs.
Update estimated purchase costs
In the BOM > Estimated Purchase Costs screen perform a mass update by default supplier price. Review your estimated cost versus inventory costs to spot any major disrepencies.
Review shop rates
Review the variances for direct labor and shop overhead once per month for an appropriate date range (3 months trailing minimum) in the Shop Rates screen and adjust your shop rates as needed if you sense that an absorbed cost variance is trending in any direction away from actual costs.
Perform a batch cost rollup
Go to BOM > Cost Rollup and perform a batch rollup to update your estimated costs for all of your manufactured items.
