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9. Follow Manufacturing Costs

The operations planner sees that work order 1 has produced its finished goods. The controller still needs to close the costs. Inspect the events separately: physical completion and accounting close answer different questions.

Your task. Separate material issue, standard-cost completion, and the later close of one work order.

When are the goods complete and the work order closed?

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Reading guide: Read document dates and accounting effects separately. The timeline does not create additional database relationships.

Read the figure in words
  • Work order 1: issue: 17 January 2024; Material issue cost: 754.29; Materials move into WIP
  • Two completions: 25–26 January 2024; Standard total cost: 1,019.85; Finished goods available
  • Work-order close 1: 1 February 2024; Total variance: 743.16; Close is a later event

Read document dates and accounting effects separately. The timeline does not create additional database relationships.

Before You Start​

Read Manufacturing. This work order is a separate released example, not a claimed production link to the earlier sales or purchase examples.

In Lesson09.xlsx, import the following tables and apply the stated filters in Power Query.

Published tableWorking nameFilter
T51_WorkOrderWorkOrderDataWorkOrderID = 1
T54_MaterialIssueIssueDataWorkOrderID = 1
T55_MaterialIssueLineIssueLineDataMaterialIssueID = 1
T56_ProductionCompletionCompletionDataWorkOrderID = 1
T57_ProductionCompletionLineCompletionLineDataProductionCompletionID = 1 or 2
T58_WorkOrderCloseCloseDataWorkOrderID = 1

1. Identify the Work and Material Issue​

The work order plans a product and quantity. A material issue records components moving into work in process (WIP). Component quantities are different from finished-good quantities.

Read the work-order number, item, planned quantity, and dates from WorkOrderData. On Notes label B2 Issued standard cost and enter:

Excel — Notes!B2
=SUM(IssueLineData[ExtendedStandardCost])

Read the issue date from IssueData. Do not add component quantities to finished-good quantities.

Work order WO-2024-000001 plans 7.03 units of item 231. Material issue 1, dated 2024-01-17, has two component lines costing 754.29. Retain the recorded precision when checking quantities and costs.

2. Separate Completion from Close​

Completion moves goods into finished inventory at standard cost. Close later resolves the work order's remaining material and conversion cost differences.

Merge CompletionData with CompletionLineData on ProductionCompletionID, using the merge procedure from Lesson 4. Expand QuantityCompleted, ExtendedStandardMaterialCost, ExtendedStandardConversionCost, and ExtendedStandardTotalCost. Keep both completion rows and load the merged table as CompletionTrace. On Notes label B3 Completed quantity, B4 Completed materials, B5 Completed conversion, and B6 Completed total. Enter each total:

Excel — Notes!B3
=SUM(CompletionTrace[QuantityCompleted])
Excel — Notes!B4
=SUM(CompletionTrace[ExtendedStandardMaterialCost])
Excel — Notes!B5
=SUM(CompletionTrace[ExtendedStandardConversionCost])
Excel — Notes!B6
=SUM(CompletionTrace[ExtendedStandardTotalCost])

Read CloseData and compare its date with the last completion date. Label Notes!B7 Variance components and B8 Stored variance, then enter the corresponding formulas below.

Excel — Notes!B7
=SUM(CloseData[MaterialVarianceAmount])+SUM(CloseData[ConversionVarianceAmount])
Excel — Notes!B8
=SUM(CloseData[TotalVarianceAmount])

Completions on January 25 and 26 total 7.03 units, 729.36 standard material cost, 290.49 standard conversion cost, and 1,019.85 total standard cost. Close occurs on February 1.

The close records material variance 24.93 and conversion variance 718.23, totaling 743.16. Conversion variance already includes direct labor 6.22 and overhead 712.01, so adding all four variance columns would count parts twice.

3. Read Actual Labor Support Separately​

Actual labor support helps explain production cost, but it is not the standard conversion amount used on completion.

Import T60_LaborTimeEntry as LaborData, filtered to WorkOrderID = 1. Inspect its EmployeeID, WorkDate, ApprovedDate, hours, and ExtendedLaborCost. In Notes!B10 total only ExtendedLaborCost:

Excel — Notes!B10
=SUM(LaborData[ExtendedLaborCost])

Label it Recorded labor support, keeping it separate from the completion totals.

Expect five labor entries, IDs 213, 214, 215, 429, and 501, with recorded labor support totaling 191.89. Compare the meaning of this result with completion's standard conversion cost. Labor records describe work and its stored cost basis, while conversion also includes overhead. Do not claim a complete variance reconciliation from labor rows alone.

Keep Your Evidence​

Save separate issue, completion, close, and labor-support sections. Explain what had occurred by January 31 and what was recorded on February 1. Record the source file, selected keys, filters, and what one result row represents. Keep your workbook or saved SQL with your explanation.

For the AIS checkpoint, retrieve the complete vouchers for material issue 1, production completions 1 and 2, and work-order close 1, using the source types MaterialIssue, ProductionCompletion, and WorkOrderClose with their paired IDs. Apply the Lesson 6 method in Excel or SQL. After balancing each voucher, retain the 1046 WIP rows separately. Its selected opening contribution is 0.00 on January 1, 2024. At January 31, 754.29 issue debits less 729.36 completion credits leave 24.93 debit WIP. The February 1 close credits that 24.93, leaving 0.00. Explain why work-order release and labor-support records create no independent additional WIP posting.

The optional account reconciliation supplies the detailed source schedule and wider pooled clearing analysis. The short selected-WIP checkpoint above is sufficient before an AIS handoff. Full pooled clearing remains an extension.

At January 31, the selected goods are completed but work-order close has not yet occurred. The standard-cost and actual-support populations have different meanings. Fuller overhead and ledger analysis belongs in the Manufacturing Labor Case.

Try One Change​

Compare the issued material cost with the standard material cost completed. Which recorded variance does their difference explain?

Then repeat the event selection for work order 2. Find its issue and completion IDs from their WorkOrderID links rather than reusing work order 1's IDs.

Hint for the second work order

Inspect MaterialIssue, ProductionCompletion, and WorkOrderClose separately for WorkOrderID 2. Collect every matching source ID before retrieving ledger rows. Multiple events in one branch must remain visible.

Compare your reasoning

754.29 − 729.36 = 24.93, matching the selected material variance. It does not explain the 718.23 conversion variance or make the completed standard total an actual-cost total.

Work order 2 has material issues 2 and 3, completions 3 and 4, and close 2 on February 1. Its material variance is 0.69. A trace containing only the first issue or first completion would be incomplete even if its selected voucher balanced. Reconcile all matching events at the cutoff before explaining the order's residual WIP.

Optional Account Reconciliation​

Keep the introductory lesson above intact. This extension asks a narrower accounting question: what balance is supported by the selected work-order events at a cutoff, and what requires a wider ledger population? Use a new worksheet or SQL section so the original evidence remains available.

Prerequisites and deliverable: finish this lesson and Find the Accounting Entries. Review WIP, clearing, and variance, then save a dated roll-forward, its source keys, and one paragraph distinguishing a selected work-order balance from company-wide manufacturing clearing. Predict each debit or credit before checking the following schedule.

Reconcile the selected work-order events, then widen the clearing population

1. Define the Selected Population​

Use WorkOrderID = 1 and its material issue 1, completions 1 and 2, and close 1. The following query pairs source type and ID, retains each complete event voucher, and groups its lines by account. It does not join a ledger amount to every operational line.

WITH selected_sources AS (
    SELECT 'MaterialIssue' AS SourceType, MaterialIssueID AS SourceID
    FROM MaterialIssue WHERE WorkOrderID = 1
    UNION ALL
    SELECT 'ProductionCompletion', ProductionCompletionID
    FROM ProductionCompletion WHERE WorkOrderID = 1
    UNION ALL
    SELECT 'WorkOrderClose', WorkOrderCloseID
    FROM WorkOrderClose WHERE WorkOrderID = 1
)
SELECT g.PostingDate, g.VoucherNumber, g.SourceDocumentType,
       g.SourceDocumentID, a.AccountNumber,
       ROUND(SUM(g.Debit), 2) AS Debit,
       ROUND(SUM(g.Credit), 2) AS Credit
FROM selected_sources AS s
JOIN GLEntry AS g
  ON g.SourceDocumentType = s.SourceType AND g.SourceDocumentID = s.SourceID
JOIN Account AS a ON a.AccountID = g.AccountID
GROUP BY g.PostingDate, g.VoucherNumber, g.SourceDocumentType,
         g.SourceDocumentID, a.AccountNumber
ORDER BY g.PostingDate, g.VoucherNumber, a.AccountNumber;

In Excel, filter GLEntry on each of those type/ID pairs, append the four complete voucher populations, merge Account on AccountID, and group by the displayed fields with separate debit and credit sums. Retain the ungrouped detail to check each voucher's balance. Grouping the 14 original ledger rows produces 11 account rows, and each of the four complete vouchers balances.

Event1045 materials1046 WIP1040 finished goods1090 clearing5080 variance
January 17 issueCredit 754.29Debit 754.29———
January 25–26 completions, combined—Credit 729.36Debit 1,019.85Credit 290.49—
February 1 close—Credit 24.93—Credit 718.23Debit 743.16

1045 holds components before issue, while 1046 holds their issued cost awaiting completion or close. 1040 receives the standard completed cost. 1090 connects conversion cost recognition and relief across a wider manufacturing population. 5080 records the close differences.

2. Roll Forward Selected WIP at Two Cutoffs​

For this work order's material-issue/completion/close postings to 1046, the opening contribution at January 1, 2024 is 0.00. By January 31:

0.00 opening + 754.29 issued − 729.36 relieved on completion = 24.93 debit WIP.

For February 1 alone:

24.93 opening + 0.00 new selected WIP debits − 24.93 close credit = 0.00 selected WIP.

The February close is excluded from January 31. The selected 1040 completion debits of 1,019.85 measure goods received from this order without establishing the company's finished-goods balance or whether those goods remain unsold. Likewise, the selected 1045 credits are an issue movement, not the materials account's ending balance. The selected 5080 close debits of 743.16 do not summarize all company manufacturing variances.

3. Separate Operational Labor from Conversion Valuation​

The five labor entries already inspected total 191.89, while the two completion lines contain 185.67 standard direct labor and 104.82 standard variable plus fixed overhead. Together those standards equal the completed conversion cost 290.49. Verify each population independently:

WITH standard_cost AS (
    SELECT ROUND(SUM(l.ExtendedStandardDirectLaborCost), 2) AS StandardLabor,
           ROUND(SUM(l.ExtendedStandardVariableOverheadCost
                   + l.ExtendedStandardFixedOverheadCost), 2) AS StandardOverhead
    FROM ProductionCompletion AS p
    JOIN ProductionCompletionLine AS l
      ON l.ProductionCompletionID = p.ProductionCompletionID
    WHERE p.WorkOrderID = 1
), labor_support AS (
    SELECT ROUND(SUM(ExtendedLaborCost), 2) AS RecordedDirectLabor
    FROM LaborTimeEntry
    WHERE WorkOrderID = 1 AND LaborType = 'Direct Manufacturing'
)
SELECT s.StandardLabor, s.StandardOverhead, l.RecordedDirectLabor,
       ROUND(l.RecordedDirectLabor - s.StandardLabor, 2) AS LaborDifference,
       c.DirectLaborVarianceAmount, c.OverheadVarianceAmount,
       c.ConversionVarianceAmount
FROM standard_cost AS s
CROSS JOIN labor_support AS l
JOIN WorkOrderClose AS c ON c.WorkOrderID = 1;

In Excel, sum the two standard-cost columns in CompletionTrace separately and sum LaborData[ExtendedLaborCost] at its retained labor-entry grain. The labor difference 191.89 − 185.67 = 6.22 agrees with the stored direct-labor variance. The close separately stores 712.01 overhead variance, giving 6.22 + 712.01 = 718.23 conversion variance. The five labor rows do not substantiate a work-order overhead amount. Adding an unexplained remainder to them and calling it “actual overhead” would go beyond this evidence.

4. Roll Forward the Complete Clearing Account​

An order's completion and close credits to 1090 do not carry the pooled payroll or depreciation debits for that order. Widen this part to every company 1090 posting, keeping posting-date cutoffs explicit. Positive signed balances below mean debit, while negative balances mean credit.

WITH periods AS (
    SELECT 'January 2024' AS Period, '2024-01-01' AS StartDate,
           '2024-02-01' AS EndDate
    UNION ALL SELECT 'February 1', '2024-02-01', '2024-02-02'
    UNION ALL SELECT 'February 2', '2024-02-02', '2024-02-03'
), clearing AS (
    SELECT g.PostingDate, g.Debit, g.Credit
    FROM GLEntry AS g
    JOIN Account AS a ON a.AccountID = g.AccountID
    WHERE a.AccountNumber = 1090
)
SELECT p.Period,
       ROUND(COALESCE(SUM(CASE WHEN g.PostingDate < p.StartDate
                    THEN g.Debit - g.Credit ELSE 0 END), 0), 2) AS Opening,
       ROUND(COALESCE(SUM(CASE WHEN g.PostingDate >= p.StartDate
                    THEN g.Debit ELSE 0 END), 0), 2) AS PeriodDebit,
       ROUND(COALESCE(SUM(CASE WHEN g.PostingDate >= p.StartDate
                    THEN g.Credit ELSE 0 END), 0), 2) AS PeriodCredit,
       ROUND(COALESCE(SUM(g.Debit - g.Credit), 0), 2) AS Closing
FROM periods AS p
LEFT JOIN clearing AS g ON g.PostingDate < p.EndDate
GROUP BY p.Period, p.StartDate
ORDER BY p.StartDate;
Posting-date periodSigned openingDebitsCreditsSigned closing
January 1–31, 20240.0020,875.0023,327.60−2,452.60
February 1−2,452.600.0012,894.16−15,346.76
February 2−15,346.76169,382.488,968.64145,067.08

For an Excel equivalent, retain a separate reference containing all GLEntry rows for account 1090. Use posting dates before each start date for opening, dates from the start inclusive to the end exclusive for period debit/credit, and dates before the end for closing. Check opening + debits − credits = closing using the full account population rather than work order 1's four vouchers.

Every movement here has a ledger source. January's 20,875.00 debit is the five manufacturing-equipment depreciation lines in JournalEntryID = 6 on January 31, while January credits are production completions. February 1 credits comprise 8,666.21 completions and 4,227.95 work-order closes. February 2 has 8,968.64 completion credits and a 169,382.48 payroll-summary debit, voucher PRS-0002-004, source ID 1002004. That summary covers payroll period 2, manufacturing cost center 4. Its debit is not allocated by GLEntry to work order 1. Use the PayrollSummary mapping rather than a direct employee-register-ID join.

The pooled balance changes with payroll, depreciation, completion, and close posting dates. A credit balance at a cutoff does not establish negative physical production cost, and this short window does not represent the full manufacturing cycle. Attribution limit: the selected evidence supports the work-order WIP roll-forward, standard completion, stored variances, and the complete pooled clearing roll-forward. It does not provide a work-order-specific allocation of every pooled debit, independently verify the overhead allocation underlying the stored close, or establish a complete actual-cost valuation for work order 1. State that limit rather than inventing an allocation or unexplained overhead residual.

Next Steps​

Production depends on employees. Next, follow approved work into payroll and its separate settlements. Continue to Follow Hours into Payroll.

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