Production Order - Cost and Expenses

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Posted on by Dharmesh

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Dear Experts

I would like to track costing and labour-wise expenses in Production Orders in Microsoft Dynamics 365 Business Central.

Could you please guide me on how to manage this — for example, how to record or link employee or labour costs against each production order operation, and later analyse the cost per employee or per lot?

Thank you in advance for your support.

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Dynamics 365 Business Central

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Ben Baxter 6,918 Super User 2026 Season 1 on at

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The out-of-the-box process would be to define your employees as either Work Centers or Machine Centers. As you record time (via Output Journal), you can list the related employee's Work/Machine Center on the line. This can also be processed through the Production Journal directly on a Released Production Order. This process allows you to record the costs associated with your labor to the Production Order.

There are also ISV Extensions available in AppSource to enable more of a Manufacturing Execution System (MES) allowing employees to scan in/out of Production Orders, which eventually posts through the Output Journal in Business Central. These solutions can make for an easier interface for the shop floor and enable a more real-time capture of labor costs.

You didn't mention material costs, but they can be captured in the same fashion, the difference being they are posted through the Consumption Journal (or Production Journal of a Released Production Order).

Best Regards,

Ben Baxter

Accent Software Inc

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Jainam M. Kothari 15,803 Super User 2026 Season 1 on at

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Hello,

To track labour and costing in Production Orders in Microsoft Dynamics 365 Business Central:

1. Set up Work/Machine Centers with cost rates

2. Define Routings with operations and time

3. Create and release Production Orders

4. Record labour via Production Journal or Add-ons

5. Post journals to update costs

6. Analyse using reports and ledger entries

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Rishabh Kanaskar 6,219 Super User 2026 Season 1 on at

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Hi,

You can track production costs and labor in Business Central by setting up Work Centers with direct and indirect cost rates and assigning them to routing operations. When posting output in the Production Journal, the system calculates labor cost based on time and rates. For analysis, use Production Order Statistics and Capacity Ledger Entries to compare planned versus actual costs. Employee-level tracking requires Time Sheets or Shop Floor Control. There is no built-in feature for detailed per-employee costing without customization; for advanced reporting, use Power BI or custom reports.

Regards

Rishabh

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