Does Seradex support Backflush operations?

Traditional and standard costing systems track costs as products pass from raw materials, to work in progress, to finished goods, and finally to sales. Such systems are called 'sequential tracking systems' because the accounting system entries occur in the same order as purchases and production. Where management desires to track direct material and labour time to individual operations and products, then sequential tracking can utilized in Seradex ERP software.

The implementation of a just-in-time philosophy has necessitated changes. Backflush is a single step production process that typically occurs and the end of a production line. Seradex ERP supports several variations of Backflushing. In the most common a Work Order or Kanban card contains a bar code. When a product is packaged into a box or carton the operator wands the bar code. This triggers several events: A Carton Label is Printed. This lists the item, quantity, date, order and possibly customer if it is make to order environment
The Open Quantity on the Work Order is reduced
The items on the bill of material are reduced from Raw Material Inventory
The finished goods inventory is increased by the carton quantity and standard cost
The cost of the Finished Goods is based on Standard Cost of materials, labor and overhead
Backflushing simplifies costing since it ignores both labour variances and work-in-progress. While in a true just-in-time environment there would be no work-in-progress at all, there will, in practice, be a small amount of work-in-progress at any point in time. It is important that standard costs are close to actual costs to keep inventory costing reasonable accurate. Backflush accounting is ideally suited to a just-in-time philosophy and is employed where the overall cycle time is relatively short and inventory levels are low.

Material Variances are calculated regularly through physical counts and the resulting inventory adjustments. Is scrap occurs manually system entries can be made to charge scrap to the work order
Labor Variances are calculated monthly by comparing the labor absorbed at standard cost to the actual payroll expenditures listed in the GL accounts
Monthly Overhead absorption is reported by Seradex and can also be compared to actual expenditures listed in the GL accounts
Actual and absorbed Labor and Overhead expenditures can be broken into categories and departments facilitating variance analysis.