RMA Process Returns all COGS and Sales

Hey wondering if anyone else has an issue with the way RMA's work.

Currently, all forms of RMA's completely wipe all cost and Quantity from a Customer Order on the items refunded.

Scenario:

I buy 1000 apples for $1 each
I ship to my factory, where I spend $1 in Labor and Packaging Materials to make them pretty
I sell 1000 apples @ $4 each
I ship out the apples
Apples arrive at the Customer but they are filled with worms and are rotten
Rightfully so, the customer complains and they get a full refund
I process a Credit RMA for all 1000 apples

Now according to Visual, I am seeing that all $2000 in cost is being wiped off of the customer order along with the $4000 in sales. Leaving the Customer Order a stack of Zero's. The $2000 in COGS are then on the Work Order which is now open and in WIP, to close the Work Order I have to cancel it, putting the COGS into a generic GL account.

I would expect that the sunk COGS on the customer order would be applied to the customer order, showing that the 1000 rotten apples actually lost me $2000. Instead it shows $0 in all categories. The actual losses will be applied randomly and will not be traceable.

Has anyone found a way to have Returns show as losses?

FordUS_ship_req.pdf

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Comments

Legacy Contributor

Don't close the original work order. Continue working on the original work order to get the 1000 GOOD apples. The losses will show on the work order, where you will now have to buy another 1000 $1 apples and spend $1000 in labor and packaging to ship them again... total cost on the work order to produce 1000 GOOD apples is now $4000.

And then you'll ship them for $4000 in sales and show $0 profit. All $4000 in cost against that customer order.

Very traceable.

mseppanen

Thank you for your response dhatfield!

What about situations where the customer looks at the rotten apples and figures that if you can't do it right once, you should not get another chance. They leave with their $4000 in hand, and order from another company.

com_proactive_201005.pdf

Legacy Contributor

In that case, I would go ahead and close that work order, if I'm aren't going to make more apples. The COGS will still flow to the bottom line and can be traced back to the work order in question, if needed. I would make sure to add a labor ticket showing the 1000 bad quantity, and add to the labor ticket description what happened. Then you'll have the story on the work order as well. You can also add notes to the work order itself indicating what happened. Adding a note to the specs of the engineering master would give you a heads up if you ever make apples again that a receiving inspection, if not already an operation, should be performed.

mseppanen

That's where we are at the moment as well.

We know that in the end, as long as the work order is cancelled out the COGS flow into the correct GL based on the work order classification.

Our concern is that the Customer Order is now Zeroed out and there is no visibility on our cost of poor quality. Unfortunately, these are not actual Part ID's as we will never make these apples again, so there's only the RMA to show our failure to supply these apples.

Also for that Customer, while we have an RMA to track the poor quality, our loss is not aligned with that Customer, so in turn it does not impact our Profit/Sales for that Customer, it shows up in overarching COGS. In turn, the people who are compensated on Profit per Customer are not impacted in their take home pay, as the bucket GL that the COGS on these returns go to is not pulled back to the Customer. Unless I am misunderstanding.

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