Calculating Average Costs for Co-products
Cost averaging for co-products happens when you close a work order using the following programs:
• Work Order Receipt (16.11)
• Work Order Receipt Backflush (16.12)
• Work Order Accounting Close (16.21)
When you run Work Order Accounting Close, the following occurs:
• Co-product costs are re-averaged by taking any remaining positive or negative WIP costs and allocating them to the co‑products. If additional costs are recorded for a work order after costs are allocated, the remaining costs can be reallocated by reopening the closed work order, applying the transaction, and closing it again.
• General ledger (GL) and current costs are updated.
Some typical steps for calculating average GL costs and average current costs for co-products follow:
1 Define the average cost allocation methods in Average Cost Method Maintenance (15.12.5).
2 Verify that the following are correct:
• Co-product/by-product definitions
• Prices for co-products, if allocation method involves price
• By-product costs
• Base process batch size
• UM of the BOM/Formula code for the base process equals the item UM for the base process
• Site setup for cost sets (GL Cost Set and Current Cost Set)
• Unit of measure conversions from base process to co-products and by-products