Preparing for Periodic Costing Period Close
Once the end of the period is reached the closing procedures begin, closing Periodic Costing is similar to closing the operational sub-ledgers, but with a few additional steps. The following topics include a series of steps to consider before you can conclude that Periodic Costing can be closed.
Use the following steps to conduct costing month-end closing with Periodic Costing:
1 Release a cost month-end close schedule to all operational areas.
You release the schedule to all operational areas so that personnel know when they have to have their activities finished. Typically, it takes one to two days to complete the tasks before conducting cost-closing tasks.
2 Verify outstanding legal documents (issues and receipts)
You can use Legal Document Browse (7.10.3) to check for issues and receipts of legal documents; that is, verify whether the legal documents are still open, what the statuses are, and so on. These documents must be closed for the month end.
3 Verify the period purchases to identify issues requiring adjustments.
You can use Transactions Accounting Report (3.21.40) to locate issues such as receipts that affect inventory and so on.
4 Check if all period non-system-created expenses are posted.
Check whether payroll, rent, power, and other non-system created expenses are ready for calculating the actual labor and burden rates.
5 Analyze negative balances.
Analyzing is important when the total balance of the items in inventory is negative. You should correct this when you have legal documents with a negative balance. You can use the following reports to help analyze and locate the reasons for the negative balance:
• Inventory Valuation as of Date (1.5.23)
• Inventory Valuation as of by Location (3.6.16)
• Item Transaction Report (30.5.13.17)
• Inventory Valuation Browse (30.5.13.1)
6 Accrue pending expenses.
For example, you accrue expenses for complementary import duties due to legal documents that did not arrive on time, or you accrue for invoice legal documents related to consignment requirements.
You can handle the accrued expenses though Periodic Costing manual adjustments. You may need to back out of manual Periodic Costing adjustments. When you do, you can use the legal document and credit the account; however, when the legal document arrives in the next period, you offset the accrual.
Note: You must consider all expenses for the amount, even when the legal documents do not arrive on time.
Legal documents are booked against the accrual account because the amounts are already adjusted in inventory. You may need to reconcile and ensure that the adjustment is correct, compensating the difference between the accrual and the legal document.
7 Run work order and repetitive account close.
8 Check for all unposted GL transactions.
Use the official layer as the transactions are related to the operational modules.
Important: You cannot have unposted transactions from the operational sub-ledgers as they are assumed to be posted to the Periodic Costing reports to balance with GL.
9 Close the entity GL period for operational modules (AP, SO, and IC).
The idea here is to guarantee that no one else does any activity for the entity GL period.
10 Pull a labor absorbed report (total labor reported or backflushed).
Pull from the shop floor control module or the advanced repetitive module.
Run an Efficiency by Work Center Report (16.20.13.19).
Note: You can use other reports too to find the labor reported.
11 Calculate total actual expenses by direct cost centers.
For labor and burden and other expenses, Periodic Costing needs to know the actual expenses by direct site, work center, or cost center. This must be done manually in QAD EE.
Note: You must enter or load the rate or the total for labor and burden every period for each work center. To do this:
a You first prepare labor/burden actual totals/rates by site, cost center (department) or work center. You calculate labor burden actual totals by rate. You perform the calculation and you provide the rate for the total amount of expenses. You do this in a spreadsheet.
b In the spreadsheet, you divide the value by the number of hours to calculate the rate by work center.
12 For overhead rates, pull the purchase or product receipts and calculate the actual overhead rate by item.
This data too must be loaded into PC.
Overhead is used to absorb costs that are not absorbed by the transactions recorded in the system. This can be fixed burden costs that must be allocated to the products through other means than regular inventory or WIP transactions. You calculate the specific values outside of QAD EE and enter them or load them manually.
As an end to this step, you perform a unit cost adjustment in Periodic Costing, taking into consideration the receipt transactions.
You upload the data to Periodic Costing using a spreadsheet and CIM load procedure.
13 Load the following:
• Periodic Costing adjustments:
• Unit cost adjustments
• Total cost adjustments
• WIP adjustments (labor and component)/
These adjustments compensate for extra expenses not covered by the transactions already in the system.
14 Run PC calculation.
17 Make any necessary transaction corrections as identified during reconciliation.
18 Repeat step 14 until Periodic Costing results are satisfactory and the Periodic Costing sub-ledger can be closed.
19 Close the PC sub-ledger and transfer the Periodic Costing journal to the management layer.