Posting to General Ledger - Actual Costing

This topic describes in detail the posting of inventory transactions to the General Ledger (GL) module. All transactions processed in the Customer, Material, Vendor, and Production modules that affect the value of inventory are posted to the appropriate inventory distribution journal (CO Dist, IC Dist, PO Dist, and SF Dist, respectively) using account numbers that can be found in the Product Codes, Departments, Purchasing Parameters, and Distribution Accounts forms.

Actual Costing - Post to Journals

The system uses the same GL account numbers when posting to the appropriate inventory distribution journal, no matter which of the four actual cost flow methods is in use (Average, LIFO, FIFO, Specific). For this reason, the transactions outlined below are for actual costing in general.

The phrase "issue cost" is used several times in this topic to refer to the cost at which an item is being issued from inventory. The issue cost value varies depending on the cost flow method in use.

General Ledger Account Numbers Used

Before processing any transactions in the manufacturing modules, the GL account numbers which are used for posting to the GL inventory distribution journals must be set up. The key accounts are stored at the Product Code level, so that different account numbers may be assigned to different classifications of items and also allow for the tracking of cost details of a unit cost.

Maintaining individual accounts for the various cost details allows visibility of these costs through work in process, inventory and cost of goods sold and more accurately determines the exposure relating to material, labor, fixed overhead, variable overhead and outside service costs. It is also possible to use one account number for all the cost detail components of an item if this cost detail visibility is not desired.

Example - Maintaining Individual Account Numbers for Each Cost Detail Component

A finished goods inventory account number and a raw materials inventory account number may be used rather than having all items posted to the same inventory account.


Finished Goods Account	Account Number
FG INV Material Cost	1001
FG INV Labor Cost	1002
FG INV Fixed Overhead Cost	1003
FG INV Variable Overhead Cost	1004
FG INV Outside Service Cost	1005


Raw Materials Account	Account Number
RM INV Material Cost	2001
RM INV Labor Cost	2002
RM INV Fixed Overhead Cost	2003
RM INV Variable Overhead Cost	2004
RM INV Outside Service Cost	2005

These accounts may be used rather than having all items posted to the same inventory account.

Example - Maintaining One Account Number for All Cost Detail Components of Finished Goods Inventory and Raw Materials Inventory


Finished Goods Inventory Account	Account Number
FG INV Material Cost	1001
Labor Fixed Overhead Cost	1001
Variable FG INV Outside Service Cost	1001


Raw Materials Inventory Account	Account Number
RM INV Material Cost	2001
Labor Cost	2001
Fixed Overhead Cost	2001
Variable RM INV Outside Service Cost	2001

Accounts List

The following lists identify the accounts found in the Product Codes, Departments, Purchasing Parameters, Work Centers, and Distribution Accounts forms.

Product Codes:

Inventory Adjustment
Material Fixed Overhead Applied
Material Variable Overhead Applied

Note: The Material Fixed Overhead Applied and the Material Variable Overhead Applied accounts are required only when basing overhead on job material issues.

Purchasing Parameters:

Vouchers Payable Account
Department
Direct Labor Applied Account
Fixed Overhead Applied Account
Variable Overhead Applied Account

Although these rates default from this location, they are also maintainable on the Current Operations, Job Operations, and Estimate Operations forms.

Work Center - Costing:

Fixed Machine Overhead Applied Account
Variable Machine Overhead Applied Account

Although these rates default from this location, they are also maintainable at the Current Operations, Job Operations, and Estimate Operation forms.

Distribution Accounts - Inventory:

Inventory Material
Inventory Labor
Inventory Fixed Overhead
Inventory Variable Overhead
Inventory Outside

Distribution Accounts - Sales/Cost of Goods Sold:

COGS Material
COGS Labor
COGS Fixed Overhead
COGS Variable Overhead
COGS Outside

Distribution Accounts - In-Transit:

In-Transit Material
In-Transit Labor
In-Transit Fixed Overhead
In-Transit Variable Overhead
In-Transit Outside

Note: You can delete any distribution account record, including the default distribution account, with a blank warehouse and blank product code.

The inventory account numbers used for journal transactions do not come directly from the Product Codes form. Rather, the inventory accounts used come from the stock location being accessed when the transaction is performed. (When a stock location is added for an item in the Inventory module, inventory accounts are entered for the location, using the Item Stockroom Location form.) The default for this field is the inventory account numbers in the Distribution Account file to which the item belongs.

These steps are taken in the system to locate the inventory account numbers:

The system searches for an exact match for both the warehouse and the product code.
If that fails, the system searches for a match for the product code and a blank warehouse.
If that fails, the system searches for a match for the warehouse and a blank product code.

If any of the account numbers the system is attempting to use have not been set up, the system does not post to the GL inventory distribution journals.