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Work Center Costing Valuation results in variation in the Transit Account ODOO V14

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mrpworking_centercost_priceworkcentre
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Amr El-Sawy

Hello Everyone,

 I'm using odoo V14, The case is when we add cost per hour for the work centers and setting  the valuation as automated for the product category of the product that we produce, When creating a Manufacturing order for that product and running the operation assigned to that work center configured, and marking the MO as done the system does the valuation as follows:

In reducing the components valuation:


                                                        Debit              Credit                                                           
Material Valuation                                                 1000
WIP                                                  1000

In increasing the FG Valuation:

                                                         Debit             Credit

WIP                                                                          1020

FG Valuation                                    1020

NOTE: the 20 added is the operation cost

So, can some one explain how does this works regarding that the operations cost are labor costs and overhead.
and how should we automate the process of valuating the product cost with the direct materials cost, labor costs, overhead costs, without going through this variations ?? 

Thanks In advance.

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Ray Carnes (ray)
Best Answer

Ideally you have a Vendor Bill, or depreciation entry, or other way of debiting WIP with the $20.

It takes a lot of information, updated frequently, to get the "right" amounts for "cost per hour" for each Work Center.

At the end of each month, you debit WIP based on your actual expenses and see what the difference is, adjusting your hourly work center costs as you go.

In general, automation comes after you have successfully developed and tested and perfected a manual process. You can then define: 

  • what to automate

  • what not to automate

  • how the automation should work

  • what information is needed

  • how to measure and monitor it

I know I am not providing a solution, I am inviting you to think about how far you are away from identifying the total amount of expenses that you want to inject back into the price of your finished goods.  

For some Customers, landing expenses back into the price of finished goods is an easier solution than identifying and updating hourly costs per work center.

For some Customers, hourly costs per work center can be discovered after measuring the last X months of Vendor Bills, payroll and depreciation - segmenting their manufacturing process into "tiers" [easy process on a cheap to run machine, hard process on an expensive to run machine, etc] and assigning a percentage of those total expenses based on the amount produced.

For some Customers, expenses are manually journaled to Cost of Goods based on the percentage of Inventory sold, each month, without using hourly costs per work center.

For some Customers, projects are setup with links to manufacturing orders and analytic entries are posted to help with finer grained costing.

Additional Resources:

https://www.youtube.com/watch?v=E5GBQipGbis

https://www.youtube.com/watch?v=5uG19B8VLo0

https://www.odoo.com/documentation/user/14.0/inventory/management/reporting/integrating_landed_costs.html

https://www.odoo.com/forum/help-1/how-can-i-reclass-or-add-fixed-manufacturing-costs-overhead-like-rent-insurance-utilities-etc-to-finished-goods-after-they-are-made-179454

https://www.odoo.com/forum/help-1/why-is-it-important-to-model-measure-wip-work-in-progress-in-manufacturing-is-this-the-only-way-to-measure-overhead-costs-168395

https://apps.odoo.com/apps/modules/browse?author=Odoo Technical Marketing&search=manufacturing

(also see the Community Apps that have been created to address this)


Old, with some out of date approaches, but still have some value in the concepts:

https://www.odoo.com/forum/help-1/odoo-wip-valuation-139977

https://www.odoo.com/forum/help-1/what-are-my-options-to-record-and-include-labor-cost-in-the-value-of-my-products-147364

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