Specifying production and subcontracting settings

<< Prev Next >>

The Production and subcontracting settings define rules for processing manufacturing overheads that occur in the multioperation make-to-order process.

The Production and subcontracting settings are available if any of the following conditions are met:

Production functionality is enabled (the Enable Production subsystem checkbox is selected in Settings > Production).
Receiving subcontracting services is enabled (the Receive subcontracting services checkbox is selected in Settings > Purchases/Warehouses).

The name of the Production and subcontracting tab may change to reflect which production and subcontracting options are enabled at the moment:

Production	Subcontracting	Tab name
On	Off	Production
Off	On	Subcontracting
On	On	Production and Subcontracting
Off	Off	N/A

To specify the Production and subcontracting settings:

In the Accounting policy window, on the Production and subcontracting tab, select the following:

Field	Description
Manufacturing overheads calculation method	A method applied to allocation of manufacturing overheads and other indirect costs. You can select one of the following: Normal costing. Indirect costs are based on budgeted cost rates. They are allocated as soon as they are recorded. Difference between budgeted and actual indirect costs is adjusted or written off at the end of month. Actual costing. Indirect costs are based on actual cost rates. They all are allocated at the end of month. To learn more about Actual costing, see the illustrated tutorial.
Manufacturing overheads allocation method	A method applied to account for manufacturing overheads using predetermined overhead rates. You can select one of the following: Plantwide allocation (PA). A single overhead rate is used across the company. Departmental allocation (DA). An individual overhead rate is used for each department. This field is only available when Manufacturing overheads calculation method is set to Normal costing.
Underallocated/Overallocated overheads accounting approach	A method applied to account for underallocated or overallocated manufacturing overheads. You can select one of the following: Write off to cost of goods sold. Posting underallocated or overallocated manufacturing overheads to a COGS account during month-end closing. Apply adjusted allocation rate. Calculating and then applying actual manufacturing overheads rates to adjust the manufacturing overheads registered at the predetermined rate. The actual manufacturing overheads rates will be calculated and applied to Work-in-progress documents during month-end closing. This will recalculate the following: Manufacturing overheads based on Work in progress documents. Finished product cost. Cost of goods sold. This field is only available when Manufacturing overheads calculation method is set to Normal costing.
Process types	Process types that Actual costing applies to. For example, if you select Assembly/Disassembly, then manufacturing overheads will be only allocated to finished products specified in Production documents where Process type is set to Assembly or Disassembly. This section is only available when Manufacturing overheads calculation method is set to Actual costing.
Accounting price	The default price type for by-products. Prices of this type will be prefilled for by-products in Production documents.

<< Prev Next >>