Accounting of direct production costs in management accounting

Here you will learn how to set up the system functions required for accounting of direct production costs. You can set this up after you configured the Basic management accounting capabilities.

This setting is required for routing/processing operations and made after you configured:

The expense accounting system has the following methods to register expenses (operating, financial, and investment):

1. By items (and activity kinds). This method is used to record direct production costs. You can keep accounting by items by amounts and quantity.
2. By expense items. You can use this method to account for direct production costs, indirect production, administrative, selling, and financial costs, other accounting period costs, deferred expenses, and for expenses to generate fixed assets. You can keep accounting by expense items only by amounts.

You can keep accounting of direct production costs using two methods. The infobase allows you to use these methods at the same time for various scenarios:

1. By item (and activity kinds)
2. By expense items

Direct production costs are assigned directly to the production lot. In this case, you do not need to use cost allocation tools.

Here you will also find out how to set up the standard cost of manufactured products and materials. You can set it up if the company enabled the Product release by standard cost. For more information on how to activate this functional option, see Basic management accounting capabilities chapter above.