The Production settings are available if the Enable Production subsystem check box is selected in Settings > Accounting settings > Production.
The Production settings define rules for processing manufacturing overheads that occur in the multioperation make-to-order process.
To specify the Production settings:
- In the Accounting policy window, on the Production tab, select the following:
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.
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.
- 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.
Accounting price The default price type for by-products. Prices of this type will be prefilled for by-products in Production documents.