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10My company is implementing Dynamics as we speak, Moving from a homegrown manual production system hybrid (manual monthly inventory) to bigger and better.
As we set up the direct/indirect Overhead/Labor applied rates to production orders, we understand the need to apply labor and overhead to production jobs as they move through WIP. However, what i struggle with is what that means from an accounting standpoint.
Obviously we have our actual overhead and payroll costs going through the GL each month through regular bills/payroll. So I'm confused on how this looks from an overall GL perspective.
Simple Example... we run a production order and put $100k into WIP via 50/50 indirect/direct Labor and MFG Overhead, and move NO other inventory to a sale that month and have no other activities. WE already have $100k in our P&L from actual costs from bills/payroll.
So, our GL before production order/WIP is Dr. $50k Utilities/Insurance/etc. and Dr. $50k Wages/Benefits expense.
Does the movement of this item in WIP then post a Cr. $50k Utilities/Insurance/etc. and Cr. $50k Wages/Benefits expense, leaving us with $100k in WIP and $0 in expense for the month? If so, then that reverses when actually sold and we technically have no expenses until that item is sold from FG Inv?
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