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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Manufacturing: Indirec...
Small and medium business | Business Central, N...
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Manufacturing: Indirect Labor

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Posted on by john.ellis 3,482

Hi:

We have a manufacturing Work Center set up in Business Central to capture Direct Unit Cost.  Based on the Work Center's Posting Group, this Direct Unit Cost is to post to a Production Labor account in the chart of accounts.

Likewise in this Work Center, we will have an amount in the "Overhead Rate" field and will have this post to some sort of Overhead account in the chart of accounts.

Now, we need this Work Center to also account for Indirect Labor.  We know that there is a field for "Indirect Cost %".

But, we don't believe that the amount calculated by this percentage can post to a separate Indirect Labor account that we will have in our chart of accounts.

Is the only way to fully account for Indirect Labor in Manufacturing to place its amount into a new Work Center and Posting Group, altogether?

John

  • Robert Jolliffe Profile Picture
    Robert Jolliffe 859 on at
    RE: Manufacturing: Indirect Labor

    You can try that, but I believe it would accumulate those costs into that Production Order as WIP in the G/L accounts you specified.  When the ITEM you are MAKING is output, then all those costs would be moved OUT of the G/L accounts you specified and posted to the ITEM Inventory G/L account of the FINISHED GOOD.

    Easy to try in a Sandbox.

    Whatever costs you put into a Production Order are accumulated into the costs of the finished item and output into that item.  I don't know how you can keep some of them in their own separate G/L accounts.

  • john.ellis Profile Picture
    john.ellis 3,482 on at
    RE: Manufacturing: Indirect Labor

    If I add a routing step (work center or machine center) for indirect labor and have its Posting Group contain the G/L account for Indirect Labor, would that not "accomplish" Indirect Labor?

  • Robert Jolliffe Profile Picture
    Robert Jolliffe 859 on at
    RE: Manufacturing: Indirect Labor

    Choice 2 from my response

    There is no indirect labor capability inherently in BC.  If you add it as a routing step to jobs - then it is costed to the job and it won't be treated as indirect.

  • john.ellis Profile Picture
    john.ellis 3,482 on at
    RE: Manufacturing: Indirect Labor

    Thanks.  But, we'd rather not go the ISV route.

    Any other ideas?

    John

  • Robert Jolliffe Profile Picture
    Robert Jolliffe 859 on at
    RE: Manufacturing: Indirect Labor

    When you say "Indirect Labor" you mean Break Time, Training, Cleanup etc... correct?

    If so - then you need to be cautious about using a Work Center that's added to the routing of the production order (which is what I think you want to do) because that cost will be transferred to the inventory value of the Finished Good when you output from the Prod. Order.

    It will post to the accounts you mention when it's WIP - but once the WIP is closed (the Prod. Order is finished) it'll go to the posting accounts per the FG item's Product Posting Group (I'm pretty sure - an accounting person can chip in here).

    There are 2 ways to collect these costs and have them expensed.

    1) Some ISV have added this kind of thing in their labor collection tools

    2) You create a Job (or possibly a Prod. Order for an indirect time item) and post the time there.  

    That probably only helps a little.  This might make a good Blog post or Video. I'd look and see if someone has done one and if not ask the question slightly differently and see if someone can answer.

    Thanks

    -Rob

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