capacity overhead costs

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Posted on by lally

Hi All ,

Manufacturing overhead represent overhead related to additional materials costs which can be solved by creating the cost groups , define the percentage in Costing sheet , then attach that cost group to the item , then if we consume that material then system would automatically post the overhead cost and add to production item ( FG).

In the same way client has some capacity overheads also is related to capacity and client is asking when post the route journal /capacity journal , then these overhead costs should be added to production item (FG).

a) Can we attach more than one cost group to the item as client has different costs for same item .. how to handle that in Ax 2012 R2 ?

b) where we need to define the capacity overhead costs in Ax2012 R2? and how does it post to FG item .. when user post the route journal ?

Thanks in advance.

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Weaveriski 23,618 Moderator on at

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a) capacity overhead is driven by resources, not items, you attach a cost category per resource for the sort of time, so you can have three different types per operation if you want to go to that depth, then in the costing version you can set overheads by cost cost group tied to the category. (Doing this without opening the software but you can go down to a very finite level. This then rolls up per item.

b) You add the cost categories to the route, you add the overhead to the costing version against labour.

It posts to the FG item when you post the route journal, unless you are standard costed, then the cost posted is standard and it posts variance and the variance types get posted differently as per the posting configuration.

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Weaveriski 23,618 Moderator on at

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In standard AX USMF demo company look at item P0001. Look at its route and operation 10. You can see this has a cost category for run time, so a cost per hour spent on the work. You will note setup and quantity are blank, you could have a different cost category for setup time, and a different cost category for each item you produce, but lets keep it simple and look at one setup.

So then look at the selected run time categories configuration which tells us it is linked to cost group L5. Note these are far from generic cost categories, they have one for run time on cutting which is linked to cutting - the more generic you are, say "labour" the harder it is to divide and add different overheads.

Then you have the costing sheet. Here we can see the cost group L5 is inserted into the labour element of the cost, then further down we have the overhead which OVH4 is looking at COC-Labour and adding in 2.00 as per the active calculation for the site. Note you can have different rates per site.

So AX is configured to look at the group COC-Labour and add 2.00. However this is only because it is configured that way, COC-Labour could be the COC-L5 and a specific overhead rate could be applied to cutting.

So in summary the cost category is assigned to a step in a route (defaulting from a resource but can be changed) per operation in the route and can be applied to quantity, setup and run time per operation. Then in the costing sheet the configuration is applied to add whatever you want at whatever level depending upon the complexity needed, so different rates per cost group which means technically per operation time (1 of 3) or by a grouping to help with maintenance.

Image size restricted by the site, but it is how it is in the demo company so you can see yourself.

Hope this helps.

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