Custom Metal Fabricator: Closing the Job Costing Gap in Sage 100
Industry: Custom Metal Fabrication / Manufacturing | Service: Sage 100 Manufacturing / Job Costing
The Challenge
A custom metal fabricator producing components for the aerospace and commercial construction sectors was using Sage 100's Work Order module for production tracking, but job cost reports consistently showed actual costs significantly above estimates — in some cases 30-40% over. Management couldn't tell whether the problem was in the quoting process (estimated costs too low) or in production (actual costs too high) because the data flowing into Sage 100 from the shop floor was incomplete.
Labor hours were being entered into Sage 100 weekly in summary form rather than by job, making it impossible to tie labor cost to specific work orders. Material usage was frequently estimated rather than recorded from actual issue tickets. The result was job cost reports that reflected accounting entries but not what actually happened on the floor.
Our Approach
We worked with both the shop floor supervisor and the controller to design a labor and material capture process that was realistic for the shop floor team — simple enough to actually be used, detailed enough to give meaningful job cost data.
Labor was shifted from weekly summary entries to daily job-specific time tickets, entered by the shift supervisor into Sage 100 at the end of each shift. Material issues were tied to the work order at the point of issue rather than estimated retrospectively. We set up work order cost variance reports in Sage 100 showing material, labor, and overhead variance by job on a weekly basis.
We also worked with management to review the cost standard assumptions used for quoting — several labor standards hadn't been updated in four years and were significantly below actual rates, which explained much of the persistent over-budget variance.
Results
Job Cost Accuracy Dramatically Improved
Within 60 days of the workflow changes, job cost reports reflected actual shop floor activity, and management could distinguish quoting errors from production inefficiency for the first time.
Unprofitable Product Lines Identified
Accurate job costing revealed that one product category — complex multi-bend assemblies — was consistently losing money at current quoted prices due to setup time underestimation. Quotes were adjusted accordingly within the quarter.
Weekly Variance Visibility
Management now reviews job cost variance weekly rather than discovering over-budget situations at month-end — enabling faster corrective action on in-progress jobs.
Related Services
Sage 100 Manufacturing, Manufacturing ERP, Reporting & Analytics, and Management Reports Guide.