DBD: Order Processing - Inventory Costing Feature

DBD: Order Processing - Inventory Costing Feature For Bill As Ship Orders

🔵 Overview The DB/distributor Inventory Costing Feature is parameter driven and applies to Bill as Ship Orders (referred to as B-type orders in this document). When the parameter is activated, all new B-type orders will use this logic. Any B-type orders already on the system will work as before.

⚠️ CRITICAL UPDATE NOTE: Please read this entire document before turning on this parameter, as there are different rules that will apply to the entry of this type of order.

This feature is enabled by checking the following question located in the Order Processing System Parameter (panel 7):

Enable Inventory Costing Feature: Y

The premise of the Inventory Costing Feature is to incorporate all the costs of a bill as shipped order into inventory and on the lot (item cost, artwork cost, freight cost, etc.). To fully utilize this feature, always estimate your costs on each line of the order. Do not leave any lines with zero cost.

Rules That Apply to New 'B' Type Orders Once Enabled

  • There can only be one form per order, and it must be on line 001 of the order.
  • The whole order must ship to the same warehouse (once all lines are received and the order is complete you can move inventory to another warehouse via Inventory Control Transaction-Transfers). When creating the special shipping record during order entry, the shipping point must be '1'.
  • An Inventory in Process G/L account must be set up (one for each warehouse if warehouse substitution is used) and entered for each sales distribution record (AR-Setup-System-System Setup-Sale Dist. G/L Interface).
  • The product code from line 001 will be used for all lines during PO receiving/Vendor invoice entry.
  • If batch processing is used, a B-type order may not be received in two different batches at the same time. If a user enters an order number in PO Receiving that is already being received in another batch, they will receive a message stating the batch number and user code of the other batch.

Discussion on Processing

When a new B-type order is created, a flag will be set on the order header to indicate the Inventory Costing Feature is in use. Upon placing the order for the first time the 'main' Inventory Costing records will be created. The header record which will contain information pertaining to the cost of the whole order will be in the FTE file. The 'main' line or transaction records will contain information specific to the line and will be in the FTF file. These records will be summaries of all the Inventory Costing transactions. Each time an order is modified (or simply looked at) these 'main' records will be updated.

The individual Inventory Costing Transaction records will be created during PO receiving. A record will be considered pending until the PO receiving update is performed, at which time they will be considered updated.

The PO Receiving Report will print the normal information, plus each new Inventory Costing Transaction record which applies to that line. They will start with 'IC', then show the line number they apply to, the Estimated in Inventory amount, the Actual Cost in Inventory amount, the Actual Cost in Progress amount, and the Unallocated Cost amount. The PO Lot Receiving Report will print the cost per receipt record, not the cost including the special charges. The lot records are not updated until the PO Receiving is updated. At that time, the estimated or actual special charge costs will be added to the lot record(s).

When the special charges (S type lines) are received, it will be determined if line 001 has been received yet or not, and if so then whether the vendor invoice for line 001 has been received or not. If line 001 has not been received or it has but not with an invoice, then the special charges will be considered 'Inventory in Progress' and the dollar amount will go to the appropriate Inventory in Progress G/L account number. This will be determined by using the product code from line 001, looking up the sales distribution code, and retrieving the Inventory in Process G/L account number. If line 001 has been received with a vendor invoice, then the special charges will be considered 'Actual in Inventory' and the Inventory G/L account number corresponding to the line 001 product code will be used.

When the product is received (line 001) without a vendor invoice, the other lines on the order will also have transactions created to show the 'Estimated in Inventory' amounts.

💡 Note: It is very important to estimate as accurately as possible the cost of these amounts on the order line.

When the vendor invoice for line 001 is received, the estimated amounts will move to actual. This applies to those special charges that a vendor invoice has been received for. If there is no vendor invoice for a special charge, it will still be considered 'Estimated in Inventory'. If there is a difference in cost between the estimated amounts and the actual amounts, any remaining lots for this order will be updated (during the PO receiving update). If there are no lots remaining, then the difference will be considered 'Unallocated Cost'.

These amounts will still be charged to the appropriate Inventory G/L account number.

💡 Note: It is suggested you make a journal entry to back the unallocated amount out of inventory and charge either commissions payable (also create a commission chargeback) and/or the appropriate cost of sales account. (See info about Inventory Costing Transaction Report below.)

It should be noted that if there is a difference in cost and the lots are updated, committed lots (lots committed to an order) will also be used. This will change the cost for the order; however, the order will not be updated. When the order is invoiced to the customer, the correct cost from the lot will be used at that time.

⚠️ CRITICAL UPDATE NOTE: If line 001 is partially received, the special charges will NOT be prorated — the full estimated or actual amount will be used.

Inventory Costing Report — Additional Information

Path: Inventory Control > Reports-Inventory Costing Trans

This report will print any Inventory Work in Progress G/L account numbers at the end with totals. The total Unallocated Cost will also print.

💡 Note: After the report is printed you will be prompted to move any transactions to history if the order is closed and all the lots in the original warehouse are gone.

Sort Options

This report has two different sort options available:

  • Salesperson — this option gives you the additional selection criteria for Customer, From Customer, and Item Code.
  • Sales Order Number — this is very useful in reconciling the cost attached to a specific inventory item because of this specific Order Number.

There are three Print Options available for this report. Since each one will create a temporary sort file, you may only check one option at a time.

Only Print orders with Unallocated Cost?

If this option is answered 'Y' or checked, the report will only print orders with unallocated cost. This will be helpful when creating commission chargebacks as discussed above.

Don't print orders with all zeros?

If this option is answered 'Y' or checked, then a temporary sort file will be created with only those orders which are not all zeros. The report will then print off this sort file.

Only Print Orders with Actual in Progress?

The Inventory Costing Transaction Report program has been modified to check for this new option, and if set to Y then a temporary sort file will be created for only those orders that have 'Actual in Progress'. This would be special charges where the vendor invoice has been received but the invoice for the product has not been received yet.

Option to Disable Job Costing by Order

There may be situations that require multiple Custom Items on a B-type Order, as in the case of Ad Specialty products.

In the System Security by operator option - Setup IV Panel, there is an option that can be set on individuals that will give them the authority to turn off Job Costing for specific orders.

Path: Setup > System Utility Functions > Administrator Function > System Access and Security > Appl Security by Operator - tab 4

Allow access to the Job Costing Flag on the Order Entry Header?

For Bill as Shipped (B-Type) orders only, Authorized Users will see the 'Turn off Job Costing' prompt in the 2nd panel - Order Info in the Order Header. The default is blank (for No). If the operator wishes to turn off Job Costing for this order only, they will need to check this field before they begin processing the line entry for this order.

Sales Order Header 2. Order Info Panel — Turn off Job Costing:

⚠️ CRITICAL UPDATE NOTE: When Job Costing is turned off on an order, additional care will need to be taken to make sure all costs are correctly allocated to the Inventory General Ledger account and make sure all special charges and freight are allocated correctly. This can be done through purchase order receiving or Inventory Transactions.

💡 Note: If this company has just started using the Job Costing Feature, all orders should be entered as NEW orders. Do not use the repeat order feature. Orders must be entered as new orders for all Job Costing Settings to be properly put in place.

If you should have any questions about Inventory Job Costing, contact DBD Support.

Frequently Asked Questions

Q: What does the Inventory Costing Feature actually do?

A: It incorporates all the costs of a Bill as Ship order (item cost, artwork, freight, etc.) into inventory and onto the lot, provided you estimate costs accurately on each order line.

Q: What rules apply once this feature is enabled for new B-type orders?

A: Only one form per order (must be on line 001), the whole order must ship to the same warehouse, an Inventory in Process G/L account must be set up per warehouse, the line 001 product code is used for all lines during PO receiving, and a B-type order can't be received in two batches at once.

Q: What happens if special charges come in before the product line (001) is received?

A: They're treated as 'Inventory in Progress' and posted to the Inventory in Process G/L account for line 001's product code. Once line 001 is received with a vendor invoice, they move to 'Actual in Inventory' instead.

Q: What happens to cost differences that can't be allocated to any lot?

A: They're treated as 'Unallocated Cost' and still charged to the Inventory G/L account. It's suggested you make a journal entry to back that amount out of inventory and charge it to commissions payable (with a commission chargeback) and/or cost of sales.

Q: What happens if line 001 is only partially received?

A: The special charges are NOT prorated — the full estimated or actual amount is used.

Q: Why would I need to disable Job Costing on a specific order?

A: For situations requiring multiple Custom Items on a B-type order, such as Ad Specialty products. An authorized operator can check 'Turn off Job Costing' on the order header's Order Info panel before entering line items.

Q: What extra care is needed if Job Costing is turned off on an order?

A: You need to make sure all costs are correctly allocated to the Inventory General Ledger account and that special charges and freight are allocated correctly, via purchase order receiving or Inventory Transactions.

Q: Should I use the repeat order feature when first starting to use Job Costing?

A: No — if your company has just started using the Job Costing Feature, all orders should be entered as new orders, not repeat orders, so all Job Costing settings are properly put in place.

Tags: order-processing, job-costing, inventory-costing, bill-as-ship, DB-distributor

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