QAD 2017 Enterprise Edition > User Guides > Costing > Cost Accounts > Work Order Accounts
  
Work Order Accounts
Labor. This account records labor cost for a department based upon standard hours reported at the work center labor rates. When labor is reported in the Repetitive and Shop Floor Control modules, the following types of transactions are made using the standard hours earned multiplied by the work center labor or setup rate.

GL Transactions Generated by Labor Reporting
 
Setup and Run Labor
Downtime
Debit:
Work in Process (Standard Labor + Burden)
Debit:
Cost of Production (Standard Labor + Burden)
Labor Rate Variance. This account records variances resulting from a difference between the actual employee pay rate and the standard work center labor rate. This variance is calculated as:
(Actual Labor Rate – WC Labor Rate) * Actual Hours
At posting, a positive variance (unfavorable) is debited to the Labor Rate Variance account and credited to WIP.
Labor Usage Variance. This account records variances resulting from a difference between the actual hours needed to complete an operation and the standard hours. This variance is calculated as:
(Actual Hours – Std. Hours) * WC Labor Rate
Where:
Std. Hours = Run Hours / Unit * Number of Units Completed
At posting, a positive variance (unfavorable) is debited to the Labor Usage Variance account and credited to WIP.
Note: Both labor rate and usage variances are normally posted at the same time as labor. However, if Post Variances at SFC is No in Work Order Maintenance (16.1), variance posting is delayed until work order receipt. Delaying posting can be useful if an operation requires more than one shift to complete. See Defining Work Order Control Settings.
Burden. This account records the variable overhead associated with production operations. The Burden account is used to accumulate accrued burden for a department. Each operation may have labor burden and/or machine burden depending on how variable overhead is applied. Machine burden is applied as a machine hour rate. However, labor burden can be applied either as a labor burden rate or as a percentage of direct labor cost.
The standard hours reported are multiplied by the standard work center labor or machine burden rate.
• Labor Burden using Labor Burden Rate:
Labor Burden = (Std. Setup Hrs. / Order Qty. + Std. Run Hrs) * WC Labor Burden Rate
• Machine Burden using Machine Burden Rate:
Machine Burden = (Std. Setup Hrs / Order Qty.* No. of Machines + Std. Run Hrs.) * WC Machine Burden Rate
Note: This option assumes that the machine hour rate applies to both setup and run. If this is not true, create a separate setup operation that has zero run hours per unit.
• Labor Burden Percentage:
Labor Burden = (Std. Setup Hrs. * WC Setup Rate * Labor Burden%) + (Std. Run Hrs. * WC Labor Rate * Labor Burden%)
Burden Rate Variance. This variance applies to burden application using burden rate percentage. It requires the actual employee labor rate.
Burden Rate Variance = Labor Burden% (Actual Labor Rate – WC Labor Rate) * Actual Hrs.
Burden Usage Variance. This variance applies to burden calculated by any of the three allocation methods—burden rate, burden percentage, or machine hours.
Burden Usage Variance = (Actual Hrs. – Standard Hrs.) * Standard Burden
Note: You can use any or all of the burden application methods to calculate standard burden.
Work in Process (WIP). WIP is the cost of open work orders. It includes the cost of component issues, labor, burden, and subcontract.
When labor is reported, WIP is debited and the Labor account credited for actual hours times actual labor rate. At posting, positive (unfavorable) labor rate and labor usage variance amounts are debited to the Labor Rate Variance account and credited to WIP. These transactions leave WIP at standard.
Cost of Production (COP). COP is the material or subcontract cost not associated with a work order and labor not associated with a work order or repetitive schedule.
• Material and Subcontract Items. The Cost of Production account is updated by unplanned issue transactions and purchase order receipts for subcontract items. For subcontract item receipts, when a work order ID is associated with the PO, the initial posting to COP is reversed and the purchase order price is posted to WIP. When work order ID is blank for the PO, the subcontract price remains in COP.
• Labor. Labor hours for maintenance, cleanup, meetings, and other labor reported in Non-Productive Labor Feedback (18.22.22) are charged to Cost of Production. The system creates a GL transaction that debits the COP account for the actual hours at the work center labor and burden rate and credits labor and burden absorption accounts.
Floor Stock. This is a clearing account for bulk issue items that are part of the product structure, but are not issued in the normal manner. These items are defined in Item Master Maintenance with Issue Policy set to No. They are issued to the floor using an unplanned issue transaction. However, the default Cost of Production account is changed to the Floor Stock account so that the material is not expensed. The issue transaction debits Floor Stock and credits Inventory. When a work order is closed, the cost of the bulk issue items is automatically credited to the Floor Stock account, and WIP is debited.
Material Rate Variance. This account records variances between costs of a component issued to the work order and the cost stored on the work order bill of material. This variance would occur if materials were issued from another company site with costs that differ from costs at the using site.The variance is computed when material is issued to a work order.