• Automatically Calculates Standard, Actual and Average Costs
• Minimizes Manual Accounting Intervention
• Estimates Costs by Item and Project
• Improves Fixed and Variable Overhead Calculations

This module provides an automated current cost roll-up and standard cost freeze capability that establishes the foundation for standard and actual cost reporting throughout all modules in the system. The current and frozen standard costs are recorded for each work order along with the actual costs incurred. The actual costs are accumulated from feedback transactions in the Inventory Control, Work in Process, and Labor Collection modules.

The DMACS Cost Accounting module provides the Cost Accounting department with the necessary mechanisms to maintain and utilize a fully automated standard costing, average costing, or actual costing sub-system. The Cost Accounting module provides an automated current, average and actual cost roll-up capability along with a standard cost freeze capability that establishes the foundation for standard and actual cost reporting throughout all modules in the system.

COST GROUPS

The major groups of cost and hours stored in the data base include frozen standard, current standard, average actual, actual, base year, and simulated. Previous cost history is automatically maintained for each cost type, excluding base year costs.

Each of the above major cost groups is further broken down into the following incremental and subassembly intermediate cost elements: Material, Free Stock, Setup Labor, Direct Labor, Fixed Burden, Variable Burden, Amortized Assets (e.g., mold, tool, and die), Outside Processing, Freight, and Packaging.

At the work center level, burden can either be omitted, computed on direct labor only, computed based on setup labor plus direct labor, or computed on machine cost.

The following groups of costs for each item can be maintained:

• Base Year (LIFO)
• Frozen
• Current (Replacement)
• Simulated
• Average Actual
• Actual

Each of these cost groups contain the following cost elements:

• Material
• Free Stock
• Setup
• Direct Labor
• Mold/Tool/Die
• Fixed Burden
• Freight
• Packaging

Each of the above cost elements is further separated into the following two categories:

Incremental Costs

These costs are the valued added costs of making an item from its immediate (single-level) components. This usually involves the costs to buy the component purchased items and the labor costs to manufacture or assemble the single-level components.

Subassembly Costs The cost of the component assemblies in the Bill of Material for an item.

Incremental costs provide the basis for determining the labor rate and efficiency variances involved in the production process. Together with the subassembly costs, material price and usage variances are measured.

In fact, DMACS tracks some sixteen different variances and automatically posts each to the General Ledger. The total cost for the item can also directly interface to the customer shipment process for accurate cost of goods sold reporting and General Ledger Interface.

The current and frozen standard costs are recorded for each work order along with the actual costs incurred. The actual costs are accumulated from feedback transactions in the Inventory Control, Work in Process, and Labor Collection modules.

At the work center level, burden can either be omitted, computed on direct labor only, computed based on setup labor plus direct labor, or computed on machine cost.

Please note that free stock is rolled up and displayed as a cost element for each item, but it is not included in the item’s total unit cost.

COST ROLL-UP

The cost objectives of the Cost Accounting module can be met through either of the two cost roll-up processes that are available, specifically: Regenerative and Net Change processing. Regenerative and Net Change processing roll-up the current standard costs and hours. Regenerative processing is a complete cost roll-up of all items, while Net Change processing is a partial cost roll-up.

The items that are included in a Net Change cost roll-up are automatically maintained by the system. When an item is re-costed during Net Change processing, all of its parent items are also re-costed. Both processes retain previous costs and hours for historical comparisons whenever changes occur.

A cost message is rolled up when lower level costs are found to be deficient (e.g., Bill of Material or router is missing for a manufactured item, no incremental material cost for a purchased item, etc.). The cost roll-up process produces a warning message report for all items where cost problems were encountered. A warning message flag is recorded for each item and imploded for all items affected by the cost problem at higher levels in the Bill of Material.

Two cost dates are maintained for each of the major cost groups for an item, the cost review date and the cost change date. The cost review date indicates the last time the particular cost group for the item was reviewed by a cost roll-up process. The cost change date indicates the last time the major cost group was actually updated, either manually or by one of the cost roll-up processes.

Cost Variances

The Cost Accounting module automatically calculates 16 different cost variances. Material variances include excess scrap, Bill of Material, material usage, and material price. Labor Rate variances include direct labor, setup labor, and outside processing. Routing variances include direct labor, setup labor, fixed overhead, and variable overhead. Efficiency variances include direct labor, setup labor, outside processing, fixed overhead, and variable overhead.

Variances are automatically calculated each month for all orders opened and closed during the period. If the DMACS General Ledger module is implemented, summarized General Ledger journal entries are automatically created to reflect the variances recorded by each job.