Scrap Reporting
HelpID: 497022051, 497022052, 497022044, 497022043, 497022047, 497022049, 497022046, 497022048, 497022042
The Scrap Reporting module provides the ability to record, track, and analyze information about the cost and causes of scrap. It can also create a journal entry to adjust the cost of scrap out of manufacturing WIP and into specific scrap accounts. A Scrap Report can adjust for both Finish Good scrap, or Component Scrap.
Scrap Reporting Setup
Navigation: Tools >> Setup >> Manufacturing >> MFG PowerPack Setup
Mark the box next to “Scrap Reporting*”. Double-click on “Scrap Reporting*” to open the Scrap Setup window.
Setup is broken into two types of Setup: Options and Lists. The Options are a series of on/off options for Scrap Reporting. None will be marked by default, so it is important to review these and enable Posting, for example, before starting to use the module. Lists are setup options which require you to input some information (such as a list of Users who are allowed to post).
Lastly, review the User Defined Fields setup.
When finished with Setup, close all windows and restart Dynamics GP.
Setup Type: Options
Allow editing open UDF fields from Inquiry: if the Scrap Record (SR) is “open” (has not been posted), marking this option will allow users to edit the user defined fields from the Scrap Inquiry window. You may choose to do this if there are users who need to enter analysis information about the scrap but who should not have access to the main entry window. This will allow them to edit the reporting & analysis fields without being able to change any of the SR costing information.
Allow editing posted UDF fields: same as above, but allows editing of the UDF fields even when the transaction has posted and is in history. No costing information can be changed at this point.
Auto-create SR from WIP Data Collection: if WIP Data Collection is used to track actual labor and machine time, you might choose to auto-generate an SR when the user enters a quantity scrapped on the WIP Data Collection window.
Posting: Adjust MOP WIP: if marked, when the SR is posted the costs calculated on the SR will be adjusted out of the manufacturing WIP costing.
Posting: Auto-Post Journal Entry: if marked, the scrap JE will be posted, otherwise it is created in a Batch and saved.
Posting: Create Journal Entry for Scrap: if marked, when the SR is posted a JE will be created to move the costs from WIP accounts into scrap accounts.
Normally both “Adjust MOP WIP” and “Create Journal Entry” should both be marked. Unmark them if the SR module is being used for reporting purposes only.
Setup Type: Strings
GL Source Doc: the SR journal entry will be created with the GL Source Document code entered here. A code must be provided.
Delete Security, Posting Security and Void Security: The Scrap Entry window may be used on a Shop Floor where users entering the Scrap Record should have limited ability to Delete, Post or Void. By default, the Delete, Post and Void buttons will be disabled, unless a User ID (or their User Class) has been granted security to Delete, Post or Void. The VOID checkbox on the Scrap Record gives users the ability to indicate that a Scrap Record should be voided, even though they cannot click the VOID button. A different user with Void Security can review these “to be voided” documents. The User ID list and Class ID list do not interact—if a User ID has security, it does not matter if their Class is listed or not. Likewise, if the User’s Class is listed, they will have security granted even if their User ID is not listed.
Scrap Record Status: create a list of user-defined Scrap Record status codes. These will be displayed in alpha-numeric order on the Scrap Entry window. If you want them to appear in a certain order, place a number before the term. Such as “1-New”, “2-Open”, etc. The status codes are for reporting purposes only and have no effect on the SR.
Scrap User Defined Fields
Scrap User Defined Fields Setup is opened from the GoTo button on Scrap Setup.
If Scrap Setup is not open, go to: Setup >> Manufacturing >> MFG PowerPack Setup. Double-click on “Scrap Setup”, then click the GoTo button >> Scrap User Defined Fields
There are eight user defined fields. A list of valid values for each field must also be created. The user will only be allowed to enter pre-defined values on the Scrap Entry window (adding new values on-the-fly is not allowed).
The User Defined fields are used on the Scrap Record itself, and also on the Scrap Components, so that each scrapped component has its own UDF fields for coding scrap information about each component.
Click the expansion button (blue arrow) to add UDF Codes.
Scrap Accounts
Scrap Accounts can be defined at the Item Class and the Item level.
Item Maintenance
Navigation: Cards >> Inventory >> Item. Select an Item, then click the Accounts button.
When creating a new item the Scrap Accounts can be pulled down to the new item from the Item Class, or defined on the Item. If you enter or change the Item Class ID on Item Maintenance, you will be asked whether or not you want to roll-down the Item Class Scrap Accounts.
Click the Roll-down button to pull down the accounts from the Item Class assigned to the Item.
When a Scrap Transaction is posted, the portion of each of these costs which is attributable to the scrapped item will be adjusted out of the WIP cost buckets for the finished good.
Scrap Accounts need to be defined on the finished good items. The Scrap Transaction will pull Scrap Accounts from the made item on the manufacturing order.
Item Class
Navigation: Tools >> Setup >> Inventory >> Item Class. Select an Item Class, then click the Accounts button.
The Rolldown button will roll-down all of the Item Class Scrap Accounts to the items in the Item Class.
Scrap Entry Overview
A Scrap Record (SR) is a transaction that tracks that scrap was created by the manufacturing process, and adjusts the scrap-related costs out of WIP for the manufacturing order and into specific scrap GL accounts.
An SR can be created for the made item, or for a specific component (or components) in the assembly. When a finished good SR is created, the module calculates the material, labor, and machine costs (and overhead values) based on the quantity scrapped, and the routing sequence during which the scrap was created.
When a Component SR is created, it is only for the material costs of the component. A Component SR can also auto-create a Manufacturing Component “Scrap” transaction to remove the component quantity from the MO, and automatically pull the items selected on the Component Transaction into the Scrap Report module.
The Scrap Costs are adjusted out of the Manufacturing cost bucket labeled “Costs Put into WIP”. By doing so the cost variance is reduced on the finished good.
Scrap Entry
Transactions >> Manufacturing >> Scrap Entry
The Scrap Entry window is used to enter and maintain scrap records.
CLEAR: Clears the window without saving changes
COMPONENTS: Opens the Scrap Component Entry window.
Cost: This is used to manually record the total cost of the scrap, or some other cost value associated with the scrap. This field is for reporting purposes only.
DELETE: Delete the scrap record. This button will only be enabled if a user has been granted Delete Security in Scrap Setup.
DISTRIBUTIONS: Opens the Scrap Distributions window.
Employee ID: Associate an Employee with the Scrap Transaction. This is used for reporting only.
GL Post Date: The date on which the scrap adjustment journal entry should be posted.
Item Description: Displays the Item Description of the made-item.
Item Number: Displays the made-item from the MO.
MO Number: Enter the MO Number, or select one from the Lookup. NOTE: if a new Scrap Record Number has not already been created, a new one will be generated automatically when you click into the MO Number field, or click the MO Number button.
Pick Number: If you are scrapping components and have already created a Manufacturing Component Transaction Entry “Scrap” transaction, select it here. An MCTE “Scrap” transaction can be created automatically from the Components window (see below).
POST: Posting moves the Scrap Record to history. Depending on Setup options the posting process will also:
- Adjust Manufacturing WIP to remove scrap costs from the “WIP IN” cost buckets.
- Create and post a journal entry, adjusting the cost of scrap out of WIP into Scrap.
This button is only enabled if the user has been granted Posting Security in Scrap Setup.
PRINT: Prints a Scrap Record report with all of the details shown on the Scrap Entry window for the current record.
Quantity Scrapped: If scrapping the Made Item, the Quantity Scrapped field must be set to at least 1. This should equal the number of made items scrapped. A Quantity Scrapped of 1 does not necessarily mean that one, complete, made item was scrapped. It could be scrapped at any point during production.
When a Finished Good Scrap Record is created, you will also need to select the Routing Sequence at which the scrap occurred. The Routing Sequence is used to identify the labor and machine costs incurred in the production of the scrapped item, up to the point it was scrapped. All material, labor, machine, and overheads costs will be removed from the manufacturing “WIP – In” cost buckets.
If scrapping specific components leave this at zero, and enter the components on the Scrap Component Entry window.
Record Date: The date the scrap was recorded.
Routing Sequence: The Routing Sequence can be selected by picking from either the Routing Sequence dropdown list, or the Routing Sequence Description dropdown list. When a routing sequence is selected the system will calculate the amount of labor, machine, overhead, and materials consumed up to and including the selected sequence. This is multiplied by the Quantity Scrapped, which defaults to 1. The Routing Sequence can be left blank if you are scrapping components only.
Routing Sequence Description: A Routing Sequence can be selected by using either drop-down list.
SAVE: Saves the record.
Scrap Date: The date on which the scrap occurred.
Scrap Record: System generated auto-incrementing number (long integer). Use the lookup to retrieve existing scrap records. The Note button allows maintaining a note attached to each scrap record. Click the New Record button to the left of the Scrap Record field to create a new transaction.
Shift: Select a Shift. This is used for reporting.
Status: Select a Status. This is used for reporting purposes only.
USER DEFINED: Opens the User Defined Fields for the scrap record.
VOID: Voiding a transaction moves it to history. The VOID Checkbox must be marked before you can void the transaction.
The Void Button will only be enabled if the user has been granted Void Security in Scrap Setup.
Void Checkbox: Void must be marked before a transaction can be Voided and moved to History. This is a double control to ensure a document is not accidentally Voided. After marking the Void checkbox, click the VOID button to move the voided transaction to history.
Scrap User Defined Fields
Navigation: Transactions >> Manufacturing >> Scrap Entry >> User Defined Button
See Scrap Setup for creating the User Defined Field lables. Only fields with labels will be enabled.
The value entered into the User Defined fields must exist in Setup. New values cannot be added on the fly.
Scrap Component Entry
Navigation: Transactions >> Manufacturing >> Scrap Entry >> Components Button
Scrap Component Entry is accessed from the Components button on Scrap Entry. This window is used to enter or change the scrapped components.
If you selected a Routing Sequence on Scrap Entry, the system calculated a default scrapped components list based on the assumption that all components were scrapped. You can delete components or change the quantities.
Components can be added to this list, or removed from it, and the quantities can be changed. However, only Item Numbers which already exist on the Picklist for the MO can be scrapped.
The Scrap Component Item Lookup (above) only shows Item Numbers from the Picklist, and the Component Item Number field will only allow Item Numbers from the Picklist.
Serail/Lot Numbers can be recorded for the scrapped components. Click the Quantity Scrapped expansion button to open Serial/Lot Entry:
The drop-down box will contain a list of the available Serial or Lot Numbers (they must already have been issued to the MO). Select a Serial/Lot from the drop-down, then click the ADD button.
Linking Scrap to Component Transaction Entry
The Manufacturing Component Transaction Entry (MCTE) window can create a “scrap” transaction to remove the component’s inventory from the MO. This transaction does not, however, have any financial impact on the MO, and leaves the value of the component in WIP. This can affect standard costing, and variance reporting.
Create an MCTE “Scrap” transaction directly from the Scrap Component Entry window to link the MCTE component scrap with the Scrap Record. If Scrap Entry already created a default list of scrap components, click Delete All to clear the window.
Click the “MFG Scrap Trxn” button. This will open MCTE and will automatically link the MCTE Scrap Transaction to the Scrap Entry Components list. You must have already performed one or more MCTE Issue transactions to be able to link a Scrap Record to an MCTE Scrap transaction.
The Scrap module will automatically create the MCTE Scrap transaction (as shown below). Mark the Components and Quantities to scrap, click “Add To Pick Doc”, then POST the transaction.
As shown above, the ARM selected on the MCTE Scrap transaction has been added to the Scrap Record’s Components. This process of linking the two transactions will (1) Remove the quantity of the item from the Manufacturing records (via the MCTE Scrap transaction), and (2) remove the Cost from the Manufacturing records (via the Scrap Record transaction).
After creating the MCTE scrap transaction, when you return to the Scrap Component Entry window it will populate with the components you scrapped.
When Scrap Components are linked to an MCTE Scrap Transaction, no changes can be made to the Scrap Components (lines cannot be removed, additional items cannot be added, etc).
Component User Defined Fields
Navigation: Scrap Component Entry >> Item Number Expansion Button
Each scrapped component can have a separate list of User Defined information. The Component User-Defined Fields are often use to provide detailed information for scrap analysis reporting.
The Item Expansion button, shown above, opens the Component User Defined window. The Expansion button will turn YELLOW when the line seleted in the scrolling window has user defined information.
Scrap Distribution Entry
The distributions calculate automatically when you select a Routing Sequence, or change the Quantity Scrapped on the Scrap Entry window. The Material Costs come from the Scrap Component Entry window. The Labor and Machine values are calculated based on the selected Routing Sequence.
These values can be manually overridden. Additional distributions can be manually entered if needed. The accounts and amounts will be used to create the Scrap Journal Entry when the Scrap Record is posted. The only requirements are that a Type is selected for each distribution, and that the total Debit Amount and Credit Amount are equal.
Scrap Costing
The Scrap Module has the ability to adjust the cost of scrap out of the manufacturing WIP accounts. Doing so reduces the amount of variance calculated for the remaining items produced by the MO.
An important aspect of using standard costing is analysis of the variance accounts. A large amount of variance indicates that the standards (i.e. routing setup and/or scrap percentage on the BOM) may not be correct. Reducing the amount of variance by posting Scrap Transactions to the GL affects the analysis of standard costs.
There are two different ways of thinking about this effect on variance. On the one hand, removing scrap means that the remaining variance more accurately reflects the amount of variance incurred on the production of each item which was actually produced.
On the other hand, the standards need to be set in such a manner that they cover the total cost of production, which includes scrap.
The Scrap Module can be used in purely a “tracking” mode, where it does not adjust the value in WIP or post a journal entry for scrap. It can also be used in a “posting” mode where it does make these adjustments. Discuss the implications of either approach with your appropriate accounting professionals.
The Scrap Module costs scrap as-if all labor, machine and components are back-flushed. The reason for this is that even when collecting WIP data entry and posting Issue transactions for components, it is not possible to tie specific costs to specific scrapped items.
Therefore, the cost of scrap (components, labor, and machine) is approximate. Since GP does not have a way to tie specific labor and machine time to a specific part, the Scrap Transaction will use the standard labor and machine costs derived from the Routing. For example, if an employee worked 1-hour on Part #1, and 7-hours on Part #2 and recorded his time with WIP data entry transactions, there is no way for the Scrap Transaction to “know” how much labor was required for each part because the WIP labor transaction does not provide a link between the WIP data and a specific part.
The Scrap Distributions are editable, so if the “correct” amount of labor or machine is known, it can be manually adjusted in the distributions.
There is one case where specific material costs could be linked: all materials are Issued at the start of an MO, every component/material and finished good used in production is serial/lot tracked, and serial-lot linking is used to tie every component to a finished good item. This is rarely done, and since labor/machine/overhead still could not be tied to scrap with precision, the standard (estimated) costs for material are used.
A simple example is shown below of the effect of posting a Scrap Transaction. An MO for 100XLG has been started, and 1-unit of CORDG has been issued. That transaction resulted in $0.67 of Material costs in the “Costs Put into WIP” column.
A Scrap Transaction was created, and an MFG Scrap Transaction generated from the Scrap Component Entry window. 1-Unit of CORDG was scrapped, as shown below, and posted.
After posting the Scrap Record, the Manufacturing Order Variance window shows that the Material Cost has been removed from the “Costs Put into WIP” column
Scrap Inquiry
Inquiry >> Manufacturing >> Scrap Inquiry
This is a view-only version of Scrap Entry. Both open and historical records can be viewed in Scrap Inquiry. Use the VIEW setting to control whether the window is looking for open or posted transactions.
Depending on Setup Options, the document and component User Defined Fields may be editable.
MO Scrap Inquiry
Inquiry >> Manufacturing >> MO Scrap Inquiry
The MO_Scrap Inquiry window is used to view all scrap records for a single MO Number. This window is also available from the Additional menu on MO-receipt Entry.