Contains the name of the work in process (WIP) calculation method that is associated with a job.
Work in process (WIP) is used to match expenses with revenues. Microsoft Dynamics NAV supports multiple ways to calculate WIP and recognition of sales and costs:
| WIP Method | Description |
|---|---|
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 your own formula for calculating the WIP associated with a job.
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| The methods that are available for you to use may be limited, depending upon how your administrator has set up work in progress. |
You cannot modify a WIP method once you have associated a WIP method to a particular job, and there are related WIP Entries and WIP G/L Entries. You can set it as the default WIP Method type for your organization, however.
Additional Information
In general, when calculating WIP, the following rules are applied:
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Recognized sales = invoice sales, and recognized costs are calculated
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Recognized costs = reported costs, and recognized sales are calculated
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Completed contract option, where no sales and costs are recognized, that is, everything is treated as WIP
Invoiced sales, calculated recognized costs
Cost Value and Cost of Sales do not recognize anything until the customer is invoiced for a job. This means that all costs are treated as WIP until the job is completed and invoiced. When invoicing occurs during the job, revenue is recognized based on the invoiced sales, that is, the Contract Invoiced Price. The recognized costs are the costs that match the invoiced sales.
Positive WIP indicates that more has been produced or provided than invoiced (recognized); this proportion of the costs is posted to a WIP Costs asset account, incurred but not yet invoiced costs. Negative WIP indicates the opposite; this proportion of the costs is posted to a WIP Accrued Costs contra asset account.
Reported costs, calculated recognized sales
Sales Value and Percentage of Completion recognizes costs as they are reported and revenue is calculated proportionally to the reported costs, that is, Usage Total Costs. Invoicing only affects WIP value. Revenue is recognized to match Usage Total Costs.
WIP Sales consists of costs plus a percentage of the expected income. A positive WIP indicates that more revenue has incurred than has been invoiced; this part of the sales is posted to a WIP Accrued Sales asset account. Negative WIP indicates the opposite; some of the sales refer to work that has not yet been performed, and sales are posted to a WIP Sales contra asset account.
Common to all WIP methods is that all WIP and recognition are reversed when the job is set to complete by the Job Calculate WIP and the Job Post WIP to G/L batch job processes. WIP can be calculated based on Cost Value, Sales Value, Cost of Sales, Percentage of Completion, or Completed Contract, depending on your selection in this field. The formulas for each calculation are included below:
| WIP Method | Calculation Formulas | What it calculates |
|---|---|---|
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. Requires Contract Total Price, Schedule Total Price, and Schedule Total Costs to be entered for the entire job for calculations to be correct. |
Cost of Sales |
| Cost of Sales calculations begin by calculating the recognized costs. Costs are recognized proportionally based on Schedule Total Costs. Requires Contract Total Price and Schedule Total Costs to be entered for the entire job for calculations to be correct. |
Sales Value |
| Sales value calculations recognize revenue proportionally based on Usage Total Costs and the expected cost recovery ratio. Requires Contract Total Price, and Schedule Total Price to be entered for the entire job for calculations to be correct. |
Percentage of Completion |
| Percentage of Completion calculations recognize revenue proportionally based on the percentage of completion, that is, Usage Total Costs vs. Schedule Costs. Requires Contract Total Price and Schedule Total Costs to be entered for the entire job for calculations to be correct. |
Completed Contract | WIP Amount = WIP Cost Amount = Usage (Total Cost) WIP Sales Amount = Contract (Invoiced Price) | Completed Contract does not recognize revenue and costs until the job is complete. You may wish 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. |
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For more information about how to work with fields and columns, see Work with Data. For more information about how to find specific pages, see Search. |