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.

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.

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…