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Production Costing with Production Orders – Understanding True Profitability for GovCon Manufacturers

Posted by JAMIS Software on September 25, 2023

Project Accounting and Job Costing have long been the cornerstones of any government contractor or project-based organization.  But does this functionality extend to production orders within a single enterprise resource planning (ERP) solution?  At JAMIS Prime ERP we understand job costing is a vital accounting method for manufacturers.  It makes it easy for GovCon manufacturers to track and trace every transaction that occurs, in real-time allowing you to understand the true cost of completing a specific job all while maintaining regulatory compliance.

A key component to calculating costs correctly is proper configuration of the Bill of Materials (BOM).  The BOM is the foundation of the JAMIS Prime ERP Manufacturing Edition and serves as a template to production. It’s where your production needs and costs are defined for inventory items to become finished goods.  Once the BOM has been configured, users will have visibility into all planned production costs such as: labor, machine, material, and subcontract costs among others.

There are multiple costing methods within JAMIS Prime ERP such as standard cost, average cost, and actual cost.  Tooling costs can be rolled up into your finished goods as well as unlimited fixed and variable direct and indirect overhead costs. An example of an overhead charge could be a fixed administrative cost.

Due to the tight, emdedded integration of all JAMIS Prime ERP modules, when prepping and budgeting for a new contract, users will have real-time insight into available inventory which is necessary for accurately planning and forecasting resources needed for won contracts.  Leveraging Materials Requirements Planning (MRP) should there be items that need to be purchased in order to produce a finished good, the system will provide a direct link to the purchasing module where a Purchase Order can be completed.

After creating a BOM and establishing production estimates, JAMIS Prime ERP enables you to create your production orders so you can control and track the transformation of raw materials, component parts, and subassemblies of your finished goods.  This is where users will gain real-time cost visibility to track actual costs associated with on-going jobs as well as finished jobs.  This ensures that any significant deviations from the planned BOM costs can be promptly identified and the necessary adjustments can be made.  It will also inform you of how profitable your project is at any point in time.

It’s important to note that JAMIS Prime ERP also has a full project management suite.  This means users will be able to track accurate production costs for one or many production orders linked to a project as well as any other project costs (engineering time, site visits, expense receipts, subcontractor work, etc.) that wouldn’t be captured at the individual production order level.  This enables organizations to understand the true cost of the project by tracking costs against production and non-production items.  So, as costs associated with a produced good occur, they will automatically flow to the project level where they can be analyzed against the overall project budget and actuals.

With JAMIS Prime ERP, your organization will have a modern ERP system that makes it easy for users to track and trace every transaction that occurs, in real-time, back to the project; whether those costs are direct or indirect.  Are you interested in discussing your needs and seeing JAMIS Prime ERP for yourself? Contact us today at info@jamis.com.

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Turn Your Financial Data Into Useful Business Insights

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Production Costing with Production Orders – Understanding True Profitability for GovCon Manufacturers

JAMIS Bill of Material / CAD Integration

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