Cost Accounting in Manufacturing (reporting) 4/4

Cost Accounting has many report and analysis. One of the most important report is Prod. Order – Detailed Calculation.

Depends of options you choose, report can get analysis with less or more details.

You can compare and monitor all different between data for:

  • Work Time Quantity, Unit Cost and Cos Amount at three variants: expected on planned, expected on released and actual on finished for each Work/Machine Center.
  • Unit Cost, Consumed Quantity and Cos Amount at three variants: expected on planned, expected on released and actual on finished for each material item.

All of these characteristic for complete production order.

Image

If we choose report with more characteristics, we can see all of this parameters but on detailed mapping analytics with monitoring of cost share u with regard to cost amount.

Image

We can analyze the same data on report Item and Period – Detailed Calculation. First report present data per each Production Order, but second report per Item and/or period.

On this report, user can choose more variants:

  • Items:
    • Entries (analytics)
    • Production groups (grouping)
    • Item Category (grouping)
    • Capacity:
      • Entries (analytics)
      • Cost Type Code (grouping)
      • Cost Groups (grouping)

Image

We can make many and many analysis, but I will recommend BI tools we have.

Cost Accounting in Manufacturing (calculation) 3/4

Adjust Capacity Cost automatic calculation process recalculate evaluated Capacity Costs to actual Capacity Cost. Actual costs of capacity are the really costs bookkeeper posted as payables costs on G/L accounts (depreciations, payrolls, energy, fuel, maintenance, transport, marketing…).

Actual Cost Amount will be reallocated on entries for each production order (released or finished status). Evaluated posted costs will be corrected with additional values. User could see only really actual costs on each entry created from PO.

Adjust Capacity Cost automatic calculation process is based on next steps:

  1. Starting the calculation
  2. Mapping initialization
  3. Takeover of percent share correction
  4. Check the applicability of the direct costs
  5. Calculation and posting of entries for correction
  6. Adjust Cost for Item Entries

Starting the calculation

We need to start Cost Accounting->Adjust Capacity Cost Journal. When we opened a journal, we need to set Journal Group with specific field Date Filter. We must choose specific Journal Group for each period.

Mapping initialization

When we prepared Adjust Capacity Cost Journal for calculating process, we need to initialize mapping for specific calculation. It means that system will make copy of mapping from Work/Machine Centers and after that we can adjust mapping for each calculation.

Takeover of percent share correction

This calculation will automatic adjust all changes on allocated costs after changing values and coefficients.

Check the applicability of the direct costs

This command makes checking whether a Work/Machine Centers not working in calculation period. If WC/MC doesn’t working in this period, system cannot make posting. System will reallocated this direct cost values to indirect costs and posting will be done.

Calculation and posting of entries for correction

When all previous steps are done, we only need to post the Adjust Capacity Cost Journal. After posting, we will get new entries in G/L Entry, Capacity Ledger Entry and Value Entry, and entries in Item Ledger Entry will be modified.

Adjust Cost for Item Entries

Before we start Adjust Cost for Item Entries, we need to do next:

  • We must to post invoice for all materials consumed in production orders
  • Is all consumed items posted on production orders
  • Change status to Finished in all production orders
  • Make FA Depreciation posting for desired period of calculation
  • Make Adjust Exchange Rates posting for desired period of calculation

After all of these steps, we need to start standard NAV command Adjust Cost – Item Entries and everything is done.

Cost Accounting in Manufacturing (setup) 2/4

In last post, we stopped on Adjust Capacity Cost automatic calculation process in NAV4Construction. As I said, this process, you do not have to use only in construction process; you can use it in all manufacturing for calculate actual cost for finish goods. We put this process in NAV4Construction model only because production is common case in construction process and Project Manager need to know what is the actual cost of their half-products or finish-goods.

Adjust Capacity Cost automatic calculation process recalculate evaluated Capacity Costs to actual Capacity Cost. Actual costs of capacity are the really costs bookkeeper posted as payables costs on G/L accounts (depreciations, payrolls, energy, fuel, maintenance, transport, marketing…). These are really costs, not evaluated costs you put in Direct Unit Costs on Work Center. Adjust Capacity Cost automatic calculation is process based on costs in G/L entries.

Before we start with describe process of calculation, we will first describe process of mapping G/L Account to Work Center costs. We can use all item costing method (FIFO, LIFO, Specific, Average and Standard), but we recommend FIFO, LIFO or Specific. For this three methods, system works at the same way and I call all them as FIFO. I will describe Standard also. We recommend FIFO, because you can have actual cost for goods and you have no reason to use Standard.

Image

Capacity Cost mapping with G/L Account is performed in table Capacity Cost Share. This table can be opened from new lookup fields Direct Unit Cost (only for direct costs) and Unit Cost (for direct and indirect costs) on Work Center or Machine Center pages. These are costs which resulting by work/machine center works.

Image

We need create Capacity Costs for the most important cost types. This Capacity Costs will be mapped with G/L Accounts. Production costs can be split by the work/machine center engagement or by the direct work costs or direct material cost allocation method.

When we put Capacity Cost Code, we have to determine Entry Type (Direct Cost or Indirect Cost), Work/Machine Center Code, Evaluated Cost Amount (we use this amount for posting before calculation), Unit Cost (calculated cost amount), G/L Account Filter (combination of G/L accounts from where we will get costs amount), Cost Center Filter (combination of CC dimension values from where we will get costs amount), Share of cost from G/L %, Influence Coefficient.

When we start Adjust Capacity Cost automatic calculation process, it is calculate different from actual and evaluated costs and post this different evaluated Capacity Costs to actual Capacity Cost in Capacity Ledger Entry, Value Entry, Item Ledger Entry and G/L Entry.

More details in some later posts…

Cost Accounting in Manufacturing (intro) 1/4

Manufacturing Management is not Construction Management, but usually production is the part of construction business. I told about this in my older posts. For this reason, I will write next few posts, primarily about cost account automatic calculation in NAV4Construction. Standard NAV already has Manufacturing Management module.

The goal of cost accounting is calculation of actual cost for each finish good. The process of cost accounting calculation is accomplished using the following steps:

  1. Posting of Production Journal for all Released Production Orders – standard NAV solution
  2. Finishing of all posted Production Orders (this is condition for actual cost amount calculation) – standard NAV solution
  3. Adjust Capacity Cost automatic calculation for period – NAV4Construction process
  4. Adjust Cost for Item Entries – standard NAV solution

After we change status of Production Order to Released, we have to post output and consumption using Production Journal.

Create released Production Order: Create new Released PO or create Released PO from other status PO. Put Source Type and Source No., desired production Quantity and desired Due Date on PO header. After header was made, you need to refresh PO (Functions->Refresh). PO lines will be calculated. PO created planned Routing and Components.

Production Journal posting: When you start Production Journal (Line->Production Journal), you can find the same values as in Routing and Components and planned output quantity. If you use manual flushing method, you need to do some of:

  • If you have output same as quantity on PO, you have to post journal.
  • If you have output different from quantity on PO but post consumption by BOM, you have to put correctly output quantity and press Calculate Consumption button. After that, you can to post journal.
  • If you have output different from quantity on PO but post actual consumption not by BOM, you have to put correctly output and consumption quantities. After that, you can to post journal.

When you post journal, NAV will post consumption and capacity costs on Cost Amount Expected. If you have Expected Cost Posting to G/L market on Inventory Setup, you will get same value posted on G/L Entries.

Finishing Production Order: When you change PO status to Finished, NAV will make Cost Amount Expected correction and make new Cost Amount Actual. Values in Cost Amount Actual field for good output will be sum of all material consumption Actual Costs and evaluated Capacity Cost. Actual Capacity Cost will be calculated later when we start Adjust Capacity Cost automatic calculation (Allocation Capacity Cost).

…Next post will explain Adjust Capacity Cost automatic calculation process in NAV4Construction. This process, you do not have to use only in construction process; you can use it in all manufacturing for calculate actual cost for finish goods.