Jobs@NAV2013 (How to create new Job? 2/2)

Jobs@NAV2013 (How to create new Job? 2/2)

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Job WIP Methods

As I said in my last post, we need to choose WIP Methods in the same-name field on Job Card. We have linked table from where we choose method, but on this table different WIP methods are configured. If we want edit them we need to press ‘Advanced’ on window, but if we want to create new we need to press ‘New on window. We can create a new Job WIP methods that reflects the needs of our organization. After we have created it, we can set it as the default Job WIP calculation method that will be used in our organization.

NAV supports multiple ways to calculate WIP and recognition of sales and costs:

  • Completed Contract: No sales or costs are part of the calculation.
  • Cost of Sales: Recognizes WIP when the customer is invoiced.
  • Cost Value: Recognizes WIP when the customer is invoiced.
  • Percentage of Completion: Recognizes costs as they are reported.
  • Sales Value: Recognizes costs as they are reported.

In addition, it is possible to create our own formula for calculating the WIP associated with a job, but not now about this.

Create a code for the method, add a description, and then select the appropriate values for the ‘Recognized Costs’ and ‘Recognized Sales’ fields. By design, the ‘System Defined’ check box is not selected, but three others are selected. There are next fields:

  • WIP Cost: For this field, the following applies: Cost Amount (WIP) = Usage (Total Cost) - Recognized Cost. For system defined WIP methods, the ‘WIP Cost’ field is the default and is checked. For WIP methods that we create, we can only clear the check box if we set ‘Recognized Costs’ to ‘Usage (Total Cost)’. When we do this, ‘Job Costs Applied’ and ‘Recognized Costs’ are not posted to the General Ledger.
  • WIP Sales: For this field, the following applies: Sales Amount (WIP) = Contract (Invoiced Price) - Recognized Sales. For system-defined WIP methods, the ‘WIP Sales’ field is the default and is checked. For WIP methods that we create, we can only clear the check box if we set ‘Recognized Sales’ to ‘Contract (Invoiced Price)’. When we do this, the contract (invoiced price) is not posted to the general ledger.
  • Valid: Indicates whether a WIP method can be associated with a job when we are creating or modifying a job. If we select this check box in the Job WIP Methods window, we can then set the method as a default WIP method in the Jobs Setup window. Once set, we cannot clear this check box if the WIP method has been specified as the default WIP Method in the Jobs Setup Window.
  • System Defined: Indicates whether a Job WIP Method is system-defined. We cannot change the contents of this field.

We are wrote about ‘Recognized Costs’ and ‘Recognized Sales’ fields. These fields has very complex methods to configure and I describe that in the following:

Detail description about WIP method

Cost Value:

Cost value calculations start by calculating the value of what has been provided by taking a proportion of the estimated total costs based on percentage of completion. Invoiced costs are subtracted by taking a proportion of the estimated total costs based on the invoiced percentage.

This calculation requires that the Contract Total Price, Schedule Total Price, and Schedule Total Costs be correctly entered for the whole job.

Cost of Sales:

Cost of Sales calculations begin by calculating the recognized costs. Costs are recognized proportionally based on Schedule Total Costs.

This calculation requires that the Contract Total Price and Schedule Total Costs be correctly entered for the whole job.

Sales Value:

Sales value calculations recognize revenue proportionally based on Usage Total Costs and the expected cost recovery ratio.

This calculation requires that the Contract Total Price and Schedule Total Price be correctly entered for the whole job.

Percentage of Completion:

Percentage of Completion calculations recognize revenue proportionally based on the percentage of completion, that is, Usage Total Costs vs. Schedule Costs.

This calculation requires that the Contract Total Price and Schedule Total Costs be correctly entered for the whole job.

Completed Contract:

Completed Contract does not recognize revenue and costs until the job is complete. You may want to do this when there is high uncertainty around the estimates of costs and revenue for the job.

All usage is posted to the WIP Costs Account (asset) and all invoiced sales are posted to the WIP Invoiced Sales Account (liability) until the job is complete.

Calculation formulas for WIP method

Cost Value:

  • Recognized Revenue = Contract Invoiced Price
  • Estimated Total Costs = Contract Total Price x Schedule Cost Ratio
  • WIP Costs = (Percentage of Completion -Invoiced %) x Estimated Total Costs
  • Percentage of Completion = Usage Total Costs/Schedule Total Costs
  • Invoiced % = Contract Invoiced Price/Contract Total PriceRecognized Costs = Usage Total Costs - WIP

Cost of Sales:

  • Recognized Revenue = Contract Invoiced Price
  • Recognized Costs = Schedule Total Cost x Invoiced Percentage
  • Invoiced % = Contract Invoiced Price/Contract Total Price
  • (Invoiced % exists as column in Job Task Lines)
  • WIP Costs = Usage Total Costs – Recognized Costs

Sales Value:

  • Recognized Costs = Usage Total Costs
  • Recognized Revenue = Usage Total Price x Expected invoicing ratio
  • Cost Recovery % = Contract Total Price/Schedule Total Price
  • WIP Sales = Recognized Sales - Contract Invoiced Price

Percentage of Completion:

  • Recognized Costs = Usage Total Costs
  • Recognized Revenue = Contract Total Price x Percentage of Completion
  • Percentage of Completion = Usage Total Costs/Schedule Total Costs
  • (Referred to as “Cost Completion %” in Job Task Lines)
  • WIP Sales = Recognized Sales - Contract Invoiced Price

Completed Contract:

  • WIP Amount = WIP Cost Amount = Usage (Total Cost)
  • WIP Sales Amount = Contract (Invoiced Price)

Job Setup

Job Setup is placed on Jobs->Administering->Job Setup.

This setup specifies the setup of jobs and the treatment of work in process (WIP) in our organization. We have few field and there are their description for configure:

  • Automatic Update Job Item Cost: Specifies update behavior for cost changes.
  • Apply Usage Link by Default: Specifies that all jobs in your organization will have a link between usage and job planning lines.
  • Default WIP Method: Specifies which WIP method is the default for your organization. You can select one of the methods provided by Microsoft Dynamics NAV, or create a customized WIP method. To see the list of available options, choose the drop-down arrow to the right of the Default WIP Method field. You can also create a customized method.
  • Default WIP Posting Method: Specifies the application of the default WIP posting method.
  • Default Job Posting Group: Specifies the default WIP posting group.

Set Up Job Posting Groups

In my last blog I wrote about ‘Job Posting Group’ configuring on Job Card and on Job Task Card. There are details about Setup ‘Job Posting Groups’. One aspect of planning jobs is deciding which posting accounts to use for job costing. To be able to post jobs, we need to set up accounts for posting for each job posting group. We can use different posting groups for each job (or each job task) if we need it. This is rarely needs, but if someone need, he can do this.

Job Posting Groups are placed on Jobs->Administering->Job Posting Groups.

Fill in the account fields as described in the following:

  • Code: A code for the posting group. You can enter up to 10 characters, including spaces.
  • WIP Costs Account: The WIP account for the calculated cost of the job WIP, which is a balance sheet capital asset account.
  • WIP Accrued Costs Account: An account for the Cost Value or Cost of Sales method of WIP calculation, which is a balance sheet accrued expense liability account. This will be posted to when the WIP adjustment requires that usage costs posted to the income statement be increased.
  • Job Costs Applied Account: A balancing account to the WIP Costs Account, which is a contra for a negative expense account.
  • Item Costs Applied Account: A balancing account to the WIP Costs Account, which is a contra for a negative expense account.
  • Resource Costs Applied Account: A balancing account to the WIP Costs Account, which is a contra for a negative expense account.
  • G/L Costs Applied Account: A balancing account to the WIP Costs Account, which is a contra for a negative expense account.
  • Job Costs Adjustment Account: The balancing account to the WIP Accrued Costs account, which is an expense account.
  • G/L Expense Acc. (Contract): The sales account that will be used for general ledger expenses in job tasks with this posting group. If left empty, the general ledger account entered on the job planning line is used.
  • WIP Accrued Sales Account: The WIP account for the calculated sales value of the WIP, which is a balance sheet Accrued Revenue account. This is posted to when the WIP adjustment requires the recognized revenue to be increased.
  • WIP Invoiced Sales Account: The account for the invoiced sales value of the WIP that is not able to be recognized. It is a balance sheet Unearned Revenue account.
  • Job Sales Applied Account: The balancing account to the WIP Invoiced Sales account, which is a contra income account.
  • Job Sales Adjustment Account: The balancing account to the WIP Job Sales Account, which is an income account.
  • Recognized Costs Account: The expense account that contains the recognized costs for the job. It is a DR expense account ordinarily.
  • Recognized Sales Account: The income account that contains the recognized income for the job. It is a CR income account ordinarily.
  • great post!

  • Hi Aleksandar,

    Great post - I have 2 questions for you:

    1)Cost Value Calculation the formular:

    •Estimated Total Costs = Contract Total Price x Schedule Cost Ratio - how do you define Schedule Cost Ratio?

    2) Are the 4 cost methods set up by default in Cronus Demo in NAV2013 (system) equal to the 4 cost methods in Nav2009, only diffenence that some setting are now avalible under Job  WIP Methods set up?

    Thank you in advance :-)