Work Order Data Flow

Work orders can be the result of customer orders or manually entered via the Work Order Entry/Query screen. Once a work order has been created, components are allocated and released to production. Component allocation is optional. Various reports such as component pick lists and open work order reports can be printed. When production has finished a work order, the work order is closed and finished goods are placed in inventory.

The components for work orders may come from a bill of material or can be entered by the user for one of a kind work orders. You may also modify the components of a work order when specifying a bill of material, again, for one of a kind work orders.

Open

The work order pictured above was entered using a bill of material for item DRS, version STD, quantity of 3. The quantity of the components is calculated based on the quantity of one finished good and the number of the components required from the bill of material. In this case 20 legs are needed as each Dining Room Set has 4 chairs (16 legs) and one table (4 legs) for a total of 20 legs per DRS. The work order will ultimately use 60 legs as we are building 3 Dining Room Sets.

When this work order is allocated, 60 LEG, 12 BACK, 3 TOP, and 12 SEAT will be allocated in inventory. Additionally, these quantities will be issued from inventory when the work order components are released to production. 

When work order components are released to production, general ledger entries are made to the Inventory module for later posting to the general ledger. For each component, the cost of component will be credited to the component's Inventory account, and debited to the work orders WIP account. You may setup a default WIP account on the Production Setup screen so that users do not have to enter it each time a work order is created.

When this work order is closed, 3 DRS will be received into inventory and appropriate general entries are made to the Inventory module for later posting to the general ledger. The finished good's Inventory account will be debited for the sum of the cost of the components, and the WIP account specified by the Work Order will receive a credit for the same amount.

Open

The picture above is a portion of the report that prints when work order components are released. We can see that our total cost of this work order is $1,740. This is the amount that will be used in General Ledger entries to credit inventory and debit the WIP account as seen below on the Inventory Posting to the General Ledger.

When the work order is closed and the finished dining room sets are placed into inventory we will see a cost of 1740.00 debited to inventory and credited to WIP. This has the effect of clearing out the WIP account.

Note that the unit cost of each dining room set is only $580 as we built 3 of them for $1740.