World-Class Job Cost Management on Acumatica
Acumatica provides real-time WIP reporting for open production orders. Manufacturers can also use the native project accounting application for more detailed job cost management. In this guide, we give a quick look into world-class job cost management on Acumatica.
For production, Acumatica supports three production cost calculations:
- The ACTUAL method uses only the actual work in process (WIP) balance to calculate the cost.
- The ESTIMATED method combines actual and planned costs and is used when reporting material and labor transactions after the produced items are received in stock
- The STANDARD method allows manufacturing management to set a standard cost for finished goods. Then, manufacturers post costs to the general ledger at that cost, with variances posted to off-setting accounts.
Regardless of the cost method selected, as production occurs, the system should update the WIP account in real-time as costs are released to the production order. Acumatica supports the following production cost drivers:
- MATERIALS: Track the cost of stock and non-stock items used to make the finished product.
- LABOR: Track the actual cost of labor applied to make the product either by the labor rate associated with the work center OR by the labor rate associated with the employee recording labor.
- FIXED OVERHEAD: Apply a fixed overhead cost associated with production, such as administrative overhead.
- VARIABLE OVERHEAD: Apply variable overhead cost based on labor hours, labor cost, material cost, machine hours, Qty. completed at the operation, Qty. completed for the order. Specify variable overhead at a particular operation.
- MACHINES: Apply cost associated with the machines and machine time applied to the production order.
- TOOLS: Apply cost based on the cost rate for each use.
- SUBCONTRACT SERVICES AND MATERIALS: Track the cost of services provided by a vendor and any materials provided and purchased from a vendor used to make the finished product.
MANUFACTURING COST CALCULATIONS
Although every ERP system calculates manufacturing costs, each application does so with slight variations. The following cost calculations are based on Acumatica Manufacturing Edition features. They represent a base model for understanding manufacturing costing in a typical, midmarket ERP application. Make sure to consult with ERP vendors and resellers when evaluating other applications.
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