Applies to: 1C:Drive 1.5.6
Related modules: Production
Created on: September 1, 2024

Objective

1C:Drive version 1.5.6 introduces Actual costing—a cost accounting method that allocates indirect costs (manufacturing overheads) based on the actual indirect cost rates. Indirect costs are allocated by Month-end closing procedure. Two allocation bases are available: in proportion to direct material quantities or to direct material costs. Previously, 1C:Drive only offered Normal costing—a cost accounting method that allocates indirect costs based on budgeted indirect cost rates during the month. Difference between budgeted and actual indirect costs is adjusted or written off by Month-end closing procedure.

After completing this tutorial, you will:

• Know how Actual costing works.
• Learn how to allocate and review costs under Actual costing.

Prerequisites

To complete this tutorial, it is recommended that you:

• Have a basic understanding of production cost calculation principles, direct and indirect costs, and cost allocation.

It is also recommended that you complete the tutorial using the latest 1C:Drive demo infobase. It already contains many data items you might need for this and other tutorials—such as counterparties, products, or operations. You are free to use any other infobase, but in that case you will have to create these data items on your own.

Case description

Batik Production Company is a company specializing in shirt manufacturing for customers worldwide. They produce batik shirts of different sizes and colors.

Consider a case where the company receives an order for 1 000 white XL-size shirts and 1 000 red S-size shirts.

Let’s go through the shirt production process step by step and see how Actual costing works.
 

Key steps

During the tutorial, you will go through the following steps:

1. Set up 1C:Drive
2. Fill initial data
3. Register production

Set up 1C:Drive

Let’s start with making several changes to 1C:Drive default settings. These changes are needed to complete the tutorial.

1. Enable multi-business accounting.

You need it to register Batik Production Company in 1C:Drive.

To do this, go to Settings; under Accounting settings, click Company; and select the Use multi-business accounting checkbox.

Now, when you go to Company, you can see the Companies link instead of Company details. Follow this link to register additional companies in 1C:Drive for your business. 

This step is optional. You can skip it and complete the tutorial using the default company if you want.

2. Enable accounting by business units.

This allows you to create additional production departments for companies. You need this because, in this example, shirt production is performed in multiple departments.

To do this, go to Settings; under Accounting settings, click Company; and select the Accounting by business units checkbox.

3. Enable Production subsystem.

You need to enable Production subsystem to register any production-related documents.

To do this, go to Settings; under Accounting settings, click Production; and select the Enable production subsystem checkbox.

4. Enable template-based accounting.

This ensures that indirect costs are allocated correctly.

To do this, go to Settings; under Accounting settings, click Company; and set the Accounting option to Use template based types of accounting.

Fill initial data

To be able to follow this tutorial, you will need to create the following data items:

1. Company (optional).
2. Accounting policy for the company.
3. Company departments.
4. Expense items.
5. Products and components.
6. Bills of materials.
7. Customers and suppliers.

Let’s see how to fill in this data.

1. Create a company named Batik production company.
   To do this, go to Company > Companies and click Create. Then, enter the company details as on the screenshot below and click Save and close.
   
   This step is optional. You can skip it and complete the tutorial using the default company if you want.
    
2. Create accounting policy for your company.
   You need it to specify that the company is using Actual costing.
   To do this, go to Company > Accounting policy and click Create. Then, enter the details as on the screenshots below and click Save and close.
    
3. Create 3 departments for your company: Manufacturing department, Assembly department, Disassembly department.
   Each department will perform a single function according to its name, for accounting clarity.
   To do this, go to Company > Departments and click Create. Then, enter the name of the department and click Save and close. Repeat for each department.
    
4. Create expense items that will register direct and indirect costs related to the manufacturing process:

• Direct material cost is the cost of components (fabric, thread, etc) consumed to manufacture the finished product (shirt).
• Electricity is the cost of electric power consumed by the company workshops during production.
• Salary is the salary bonus paid to employees for successful completion of the order.

To do this, go to Company > Income and expense items and click Create. Then, enter the details as on the screenshot below and click Save and close. Repeat for each expense item in the table.

#	Description	Item accounting category	Income and expense type	Allocation method
1	Direct material cost	Direct product cost	Direct product cost	n/a
2	Electricity	Indirect product cost	Manufacturing overheads	Allocate in proportion to direct materials quantity
3	Salary	Indirect product cost	Manufacturing overheads	Allocate in proportion to direct materials cost

5. Create products and components relevant to the tutorial.
To do this, go to Production > Products and click Create. Then, enter the details as on the screenshots below and click Save and close. Repeat for each product in the table.

#	Description	Product type	Base unit	Income and expense item (Work-in-progress)
1	Batik shirt (white, XL)	Inventory	pcs	Direct material cost
2	Batik shirt (white, XL) packed x20	Inventory	pcs	Direct material cost
3	Batik shirt (red, S)	Inventory	pcs	Direct material cost
4	Batik shirt (red, S) packed x20	Inventory	pcs	Direct material cost
5	Button	Inventory	pcs	Direct material cost
6	Fabric (white)	Inventory	m2	Direct material cost
7	Fabric (red)	Inventory	m2	Direct material cost
8	Label	Inventory	pcs	Direct material cost
9	Thread	Inventory	m	Direct material cost
10	Electricity consumed	Service	pcs	n/a
11	Bonus paid	Service	pcs	n/a

6. Create the operation that will be used to produce the shirts:

7. Create bills of materials for both shirts.
A bill of materials for a product determines how many units of each component are required to manufacture a single unit of that product.
To do this, go to Production > Bills of materials and click Create. Then, enter the details as on the screenshot below and click Save and close.

Repeat for each product in the table.

Finished product [quantity]	Process type	Routing	Component name [quantity]
Batik shirt (red, S) [1]	Production	Sewing [1]	Button [5]	Label [1]	Thread [2]	Fabric (red) [2.0]
Batik shirt (white, XL) [1]	Production	Sewing [1]	Button [7]	Label [1]	Thread [3]	Fabric (white) [2.5]
Batik shirt (red, S) packed x20 [1]	Assembly	n/a	Batik shirt (red, S) [20]
Batik shirt (white, XL) packed x20 [1]	Assembly	n/a	Batik shirt (white, XL) [20]

8. Finally, create customers and suppliers Batik production company will interact with during the tutorial.

To do this, go to Sales > Customers, or Purchases > Suppliers, and click Create. Then, enter the counterparty’s name and click Save and close.

Counterparty	Account type
Giant mall	Customer
Components supplier	Supplier
Indirect cost supplier	Supplier

Register production

1. Now that all data is in place, let’s register the entire chain of 1C:Drive documents describing the shirt production process.

However, before Batik production company can start manufacturing shirts, its warehouses must be fully stocked with components.

To do it, create a Supplier invoice.

Go to Purchases > Supplier invoices and click Create. Then, enter the details as on the screenshot below and click Post and close.

Now, create another Supplier invoice. This one records indirect costs of shirt production—namely, electricity consumed and bonus paid.

2. Once the components are in stock, Batik production company can start working on these shirts.

First, create a Production order and make sure it is filled as on the screenshot below:

3. The first step of Production process is consuming the components.

To register this fact, generate Work-in-progress documents from the production order.

You will need two of them, because in 1C:Drive manufacture of each product is recorded in a separate document.

Make sure the Work-in-progress are filled as on the screenshots below, and then set their status to Completed.

Now is a good time to check the Work-in-progress (actual costing) report.

As you can see, all components are consumed correctly:

4. The next step is manufacturing the shirts from the components consumed earlier.

To register this fact, generate a Production document from each Work-in-progress.
Make sure the Production documents are filled as on the screenshots below:

5. Now that production is complete, let’s see how 1C:Drive calculates the production costs under Actual costing.

To do it, use Cost of goods produced (actual costing) report.

As you can see, all quantities and amounts of consumed components are correct—but electricity and salary expenses are not even mentioned.

That’s because under Actual costing, all indirect costs are calculated during the Month-end closing procedure.

To perform it, go to Company > Month-end closing, enter the details as on the screenshot below and click Month-end closing.

Now, generate the report again. Note that all costs, including indirect ones, are now available.

Pay attention to allocation of indirect costs. You can see that both costs are allocated between the two products in different proportions:

• The majority of electricity bill goes to the XL white shirt.
  That’s because electricity allocation is quantity-based, and quantity of components consumed to produce an XL shirt is much more than for an S shirt.
• The majority of salary bonus goes to the S red shirt.
  That’s because salary allocation is cost-based, and fabric used for red shirts is very expensive, making red shirts cost much more than white shirts.

6. Finally, the last step is packaging the manufactured shirts into convenient 20-shirts packs.

Create another Production order, this time with Assembly process type:

Generate a Production document from it and make sure it is filled like this:

And, of course, create another Supplier invoice for electricity and salary bonus. Make it identical to the previous one, but remember to change the receiving department to Assembly department:

To allocate these indirect costs, run month-end closing procedure once more.

And finally, check the Cost of goods produced (actual costing) report:

As before, pay attention to allocation of indirect costs:

• Electricity bill is split exactly 50/50 between red and white shirt packs.
  That’s because electricity allocation is quantity-based, and the quantities of red and white shirts that went into the packs are the same.
• The majority of salary bonus goes to the red shirt packs.
  That’s because salary allocation is cost-based, and, as we noted earlier, red shirts cost more.

This concludes the tutorial. Now you are familiar with the basics of Actual costing. Thank you for your time!