Minimum Version Required: 22.11
Pre-Conditions
Set Up Requires a Non Inventory Package with specific characteristics to create Overhead Product(s) for use in Expense Account Maps and Product Cost Plans
Permissions needed for configration:
- Product Edit - to create Package and Products
- General Accounting Management - to create Expense Account Maps
- Purchase Cost Edit - to create Product Cost Plans
*All required Permissions are included in the 'Full Access' role. These users do not need to add additional permissions to complete Overhead Allocation set up.
Steps
How to Set Up Manufacturing Overhead Allocations
Using Universal Search, navigate to the Product Types table
Click Add Product Types to create a new Non Inventory Product Type
Enter values to all required and applicable optional fields displayed the ‘New Product Types’ form and click the ‘Add Record’ button when complete
Field values:
- Product Type - the name of the Product Type, should be clear and recognizable at a glance.
Naming suggestion: Overhead Allocation Setting
- Track Inventory - Set to False
- Track Customer History - Set to False
- Include in Sales Reports by Default - Set to False
- Type Code - Set to Overhead
- TTB Process Type - Not Set Yet
- TTB Process Category - Not Set Yet
Click Sub Tables and select Products
From the Products Sub Table view, click Add Products to create new Overhead Product(s) using the Overhead Allocation Setting Product Type.
TIP: Only one product is required; but multiple Products can be created for different types of overhead (labor, facilities, etc.) in order to track Allocated Overhead with different GL Accounts.
Enter values to all required and applicable optional fields displayed the ‘New Products’ form and click the ‘Add Record’ button when complete
Field values:
- Product Name - Enter a unique name for the Overhead product. If multiple Products will be created for these, consider appending the Product Name with the Type of Overhead.
Example: Overhead - Labor, Overhead - Facilities
- Package - set to 'Misc'
- Product Type - set to 'Overhead Allocation Setting'
- Brand - set to 'Misc'
Repeat Steps 5 & 6 as needed until all Overhead Products are created
Using Universal Search, navigate to the 'Expense Account Maps' table
Click the Add Expense Maps button
Enter values to all required and applicable optional fields displayed the ‘New Expense Account Maps’ form and click the ‘Add Record’ button when complete
NOTE: If multiple Overhead Products were created, an Expense Account Map is required for each Overhead Product. If only one Overhead Product was created, create one Expense Account Map against the Overhead Allocation Setting Product Type.
Using Universal Search, navigate to the 'Product Cost Plan' table
Click the 'Add Product Cost Plans' button
Enter values to all required and applicable optional fields displayed the ‘New Product Cost Plans’ form and click the ‘Add Record’ button when complete
Field Values:
- Product - set to Overhead Product
NOTE: This field is set to a single value, meaning if multiple Overhead Products were created (Overhead - Labor, Overhead - Facilities, etc), multiple Product Cost Plan records need to be created for each, individual Overhead product.
- Location - optional field; each Overhead product created Overhead products can be assigned to unique Locations if there are varying Allocation Rates.
- Case FOB - set to the Allocation Rate per Unit --> Be sure the UOM (Unit of Measure) when determining the allocation rate is the same as the UOM for each production stage you plan to allocate the product too. (Ex: Barrels, Cases, etc.)
Best Practices
Most common account type mapped is a Contra - Cost of Goods Sold account. If an account like this does not exist, create one on the Accounts table.
Refresh your allocation rates annually, at a minimum. Use the Expiration Date field to schedule the change in Allocation Rates as desired.
Additional workflow options:
1. Add a final 'Overhead' stage at the end of the Recipe, and add the non-inventory Overhead product as a RecipeComponent.
Use this if the amount of overhead is static by Recipe. Meaning, it will always be added and typically the same amount for every PdO using that Recipe. This would mean the overhead is pre-defined and known prior to PdO completion.
This means you have to add overhead prior to the inventory from the PdO becomes available.
2. Manually add a Production Component in the final Stage prior to completing the PdO.
Use this if the amount of overhead is not static. Meaning, it varies based on real-life activity on that actual PdO. This would mean the overhead is not pre-defined, but is manually calculated prior to PdO completion.
This means you have to add overhead prior to the inventory from the PdO becomes available.
3. Manually add a Production Component in the final Stage AFTER completing the PdO.
Use this if the amount of overhead is not static. Meaning, it varies based on real-life activity on that actual PdO.
This would mean the overhead is not pre-defined, but is manually calculated AFTER the completion of the PdO. This would be used if the PdO is being completed on the handheld, and then someone in the front office goes through and adds overhead to all PdOs at one time.
This means the inventory from the PdO becomes available (at a lower cost) prior to the overhead being added. This will result in a FIFO adjustment if the inventory is consumed or sold prior to adding the overhead.