🔶 Overview

Our demo package encompasses transactions that require posting. Through a practical example, our goal is to illustrate how costs are subsequently allocated to different work centers. To enhance and expedite your familiarity with Advanced Manufacturing Cost Calculation, the package contains relevant data. In the following steps, you are required to post several costs to the General Ledger. Costs recorded in the General Ledger can be distributed, and are specifically linked to capacity costs, as detailed in the following text.

Functionality of the Production module in 365BC, facilitates production monitoring, as well as the entry of realization data. In addition, it enables the planned, the actual cost price the costs of the technological process of production included in the product. This allows all products (SP and FP) to:

• They have a real cost price based on material consumption
• They have an estimated cost price based on the engagement of technological capacities

The estimation of the cost price based on the engagement of technological capacities is the more accurate, the more accurate it is an estimate of capacity costs in which it is necessary to include the following costs:

• Depreciation
• Workforce
• Propulsion energy
• Etc...

To acquaint yourself with our Production module in 365BC, you need to download the package into your system. The steps for importing the package are available on the following link:

Feature	Description
How to import Advanced Manufacturing Cost Calculation	Click on Package Import, and it will redirect you to the page with instructions for downloading the package.
Cost posting	Recording costs allows us to efficiently create expense entries in a few simple steps, which are subsequently allocated to work centers and shared as capacity costs.
How to setup and use Advanced Manufacturing	Setting up advanced manufacturing involves configuring and arranging the necessary components and processes to enable an efficient manufacturing system.
How to create Prod. Order Report	It shows the usage of materials and included costs per work centers and utilized capacities.

🔶 How to import Advanced Manufacturing Cost Calculation package

Import the package to familiarize yourself with our Advanced Manufacturing Cost Calculation. This package assists in the analysis of production costs and optimization to achieve greater efficiency, accuracy, and prudent decision-making in the manufacturing environment.

Note: The package available for import into your system is a demo. This implies that you should import it into an empty environment or a sandbox, and you're welcome to experiment with its functionalities to gain a better understanding for our Advanced Manufacturing Cost Calculation.

In the search bar enter Assisted Setup.

1. Select the Set Up NPS Manufacturing Management package.

2. Accept warning and next.

3. Select demo.

4. Download package.

5. It asks the question only the first time you download the package. - Allow Always

6. Apply Package and next.

7. Finish.

The package will be ready in a matter of minutes, allowing you to resume your work in Business Central.

When you've finished following all the steps to import the package, an additional tuning is required under Company Information → User Experience → Premium, as shown in the image. Enter Company Information into the search bar.

Premium Experience- All the features mentioned in the user documentation for Business Central are designed with the assumption of the Premium experience, implying that these features encompass the entire range of User Experience elements.

🔶 Cost posting

1. Begin by conducting a search for "Purchase Invoice." Within the package, you will find two purchase invoices. One invoice corresponds to the expenses incurred (from vendor NPS) for electricity and other associated costs, while the other invoice is related to the materials utilized in product manufacturing. Both invoices need to be posted in the accounting system. In this manner, we have logged the expenses in the General Ledger and acquired the materials intended for consumption during product production.

2. Navigate to the search bar and enter General Journal. In this page General Journal, you will be required to post the salary cost and depreciation that have been previously entered. After posting journal entry you will receive expenses in the general ledger, related to the capacity costs and work centers.

3. Work centers have been created within the package. They are set up for product manufacturing, as per our example from the package, as shown in the image below.

4. Navigate to the search bar and enter Items. In that page, there is a product along with two materials used for its production. The product is accompanied by Production (BOM) and by Routing, as shown in the image below.

Production BOM – status must be changed to Certified.

Routing – status must be changed to Certified.

When the status is set to NEW, the use of Production BOM and Routing is not possible.

You need to initiate the action Calculate Work Center Calendar at the work center.

Note: The work center calendar calculation is a standard action that you can initiate from the work center page. To execute the calculation, it is essential to create a calendar in the Shop Calendars.

Calendar - Shows the sum of the available time for all work and machine centers that are assigned to each work center group. You can view the information by day, week, month, quarter, year, or fiscal period by selecting the appropriate matrix option prior to selecting Show Matrix. You can also view the capacity by any capacity units of measure that you've defined.

When you confirm OK, the calendar initialization process is completed.

🔶 How to setup and use Advanced Manufacturing

1. Defining the types of capacity costs.

Using the "search" function, we can access the table of capacity costs. The types of costs can be defined according to the company's preferences. In our case, we have created capacity costs that correspond to the expenses we recorded in the general ledger, and we are offering guidance on allocating them to the work center in the subsequent text.

2. Linking the G/L Account with the work centers.

In the capacity cost allocation table, each work center should be associated with the cost type from the previous step. In the "g/l account" field, it is necessary to enter a range of accounts (e.g., 51...51999) or a single G/L Account that represents a specific cost type. Because the costs that are recorded in the general ledger need to be transferred to the Capacity Cost Share table. It's possible to consider only costs that are recorded with a specific dimension value.

• Type – Determines the type of capacity cost allocation.

• No. – Number of the work center.

• Description – Work center name.

• Capacity Code Cost type label (electricity, gas, wages, other...). The cost types defined in the "Capacity Cost" table.

• Entry Type – Specifies the type of capacity cost share (Direct cost, Indirect cost). This data is taken from the work center card, where the definitions of these entries are specified.

On the work center card, you can assign indirect costs (shown under the posting section with an image of indirect costs), and you can enter the percentage of the indirect cost. Work Center Card:

The image demonstrates the transfer of the indirect cost percentage from the work center card, where it is defined, and how it impacts of capacity costs. The indirect cost percentage is assigned to direct costs during the calculation process

• Direct Unit Cost – Specifies the cost of one unit of the selected item or resource.

• Indirect cost – Percentage of indirect cost defined at the work center card. This percentage is applied to the direct cost.

• Unit Cost – Specifies the cost of one unit of the item. It is obtained when you divide. The Cost Posted in GL (share): Capacity Quantity

• New Unit Cost – Specifies the new cost of one unit of the item on the line.

• G/L Account No. – Represent a cost account or a group of cost accounts in the general ledger where actual costs incurred at a given Work Center are recorded.

• Share of Cost on G/L account % – Represents the percentage of actual costs from defined accounts that should be allocated to the given work center (and thus to all products produced on it in the given period)

• Cost Posted to GL – It determines whether the cost is posted in the general ledger (GL).

• The Cost Posted in GL (share) – Determines the cost posted to GL (share).

• Capacity Quantity – Determines the amount of capacity.

Note: You need to post your production journal using the standard "Released Production Order" function and then change its status to "Finished".

The complete cost can be taken from the set configuration or only a percentage can be entered. Both direct and indirect costs can be mapped at each work center. After completing the setup, you should proceed to the "Adjust Capacity cost" action. This action will show the amounts for the Direct Unit Price, Unit Price, and New Unit Price.

Note: The Direct Unit Price, Unit Price, and New Unit Price will be visible in the capacity cost share table only after the Production Journal and Adj. Capacity Journal are posted.

The field Share of Cost % on the account also has an impact on the price. The percentage value in the Share of Cost % field is calculated from the posting of the Adj. Capacity Journal. In Business Central, the system considers the capacity of a work center, multiplies it by one hundred, divides it by the total capacity, and then applies this resulting percentage to the cost amount allocated to the work center in the capacity allocation table.

3. Creating and posting Calculation

Initiating a calculation based on previously set parameters is done using an ‘’Adj. capacity Journal’’. After opening journal, it is necessary to set the package for a specific calculation (for specific period).

4. Filling journal

After setting up the Journal Batches, the mapping process is initiated in 4 steps, as in the picture.

Once we have selected mapping, the Capacity Cost Share page opens, where we initiate the mapping process:

1) Initialization Mapping - Implies that the mapping for the given subsequent capacity calculation is created as a copy of the current mapping.

2) Update the cost share on account by cost code and entry mapping - The percentage costs share at the work center is calculated based on the capacity consumed.

3) Checking the applicability of direct costs- The process of checking the applicability of direct costs entails identifying costs that the specified work centers cannot fully absorb due to insufficient activity (such as work hours or production quantity) during the designated period. These unabsorbed costs are subsequently categorized as indirect costs and they are distributed among work orders.

4) Unapplied cost share - It checks if any cost is not allocated and updates the Share of Cost % field.

5. Adjust Sherd per Order

After completing all four mapping points, you should return to the Adj. Capacity Journal, it is necessary to fill the Journal. That function will automatically fill in the lines of the order for further posting.

Note: Before posting Adjust Capacity Journal, it is necessary to:

• Promptly post all consumption items or outputs for active work orders.

• Close completed work orders (if a work order is not closed, only additional capacity items are booked, and they are transferred to actual production costs only after the work order is closed).

• Post depreciation for fixed assets for the calculation period (e.g., on the last date of the calculation period), as well as invoices for other expenses that are allocated-mapped as direct (indirect) capacity labor costs.

• Initiate processing for calculating unrealized exchange rate differences (particularly important at the end of the year)

6. Journal posting

The final step is to post Adj. Capacity Journal.

By posting this journal, as a result value entry and general ledger entry will be created. Also, after posting the journal, it is necessary to initiate report ''Adjust Cost - Item Entries'' to apply the calculation to the cost of produced items.

🔶 How to create Prod. Order Report

This report offers valuable insights into the production quantity, the associated material consumption and the level of capacity utilization specific to that quantity. The rows of the report show the quantities produced, the amount of material consumed for that quantity and the capacity utilized for that quantity.

In the search bar, enter Prod. Order - Detailed Calc.

1) Produced Show - If it's checked, it indicates that the item details will be shown.

2) Component Show - If the checkbox is checked, it indicates that material costs will be shown on the report.

3) Capacity Show - If the checkbox is checked, it indicates that capacity costs will be shown on the report.

4) Status - On the list, you can choose the order status for which you wish to review the details.

5) No. - Select Production Order

This report shows us:

1. The produced quantity per unit of measure.

2. The amount of material consumed for the produced quantity per unit of measure (for example, for a package, one material is in kg, and the other material is in pcs).

3. The amount of capacity consumed for the produced quantity per unit of measure (for example, for a package, it's in minutes).

4. The costs included in production and their proportion (allocated based on the specified percentage in the capacity cost distribution table).

5. The total cost value per work centers.

6. The total value of the produced product.