Setting Up Product Codes

Open the Product Codes form.

Note: The fields on this form maintain General Ledger account numbers. The account numbers you enter must be valid account numbers in the Chart of Accounts.

Specify this information:

Product Code: Specify a code to use to identify the group of items for which you want to display information.
Product Code Description: Specify a description for the new product code.

Use the General tab to set the price markups, overhead rates, and MRP and APS reschedule tolerance factors for a group of items identified by a product code. You can enter product codes as selection criteria when generating many reports. Specify this information:

Markup

Specify the markup you want to associate with this product code. The markup is the ratio of price to cost. For example, you would enter a 75% markup as 1.75. The markup you enter determines what is used as the standard markup for items associated with this product code.

If you select the Markup check box next to the Unit Price field on the Item Pricing form, the Unit Price field reflects the markup for that particular item. The price of an item is calculated by multiplying the Unit Cost by the Markup. For example, the Markup should be at least 1, since:

P = C x M
P = Price
C = Cost
M = Markup

If you enter a markup for the product code, the system only saves it if you have can cost authorizations for this program.

Price Code

Select an item price code if you are using the price matrix pricing.

(Price Code Description)

A description for the price code is displayed.

Unit Code

Select a unit code.

(Unit Code Description)

A description for the unit code is displayed.

Matl Ovhd Rate

Specify the fixed material overhead rate you want to use for applying overhead costs to material costs. For example, if you apply a 2% rate, the value you must enter in this field is 0.020. Fixed costs do not necessarily increase as volume increases. Warehouse rent and machine maintenance are examples of fixed costs.

Matl Vovhd Rate

Specify the variable material overhead rate you want to use for applying overhead costs to material costs. For example, if you apply a 2% rate, the value you must enter in this field is 0.020.

Variable costs fluctuate according to volume changes. Manufacturing supplies and freight charges are examples of variable costs. These costs are applied to material as you issue the materials.

Material overhead rates are used when applying overhead to material costs, as opposed to labor costs. Fixed and variable labor overhead rates can be entered on the Department form. Material, labor, and machine overhead rates are applied according to the criteria entered in the Overhead Basis field on the Work Center - Scheduling form.

Cycle Tolerance

Specify the tolerance percentage you want the system to use when posting cycle count records. If the actual count is within the given percent of the starting count, the difference is not considered as a variance. The on hand balance of the location is adjusted to the new count.

Forecast Look Ahead

Specify the number of days to look forward from the forecast date to determine the amount of forecast that has been consumed.

Forecast Look Behind

Specify the number of days to look backward from the forecast date to determine the amount of forecast that has been consumed.

Include in Configuration

Select this check box to include the item in unit configuration.

Use the WIP tab to set the accounts to which you want to assign costs for Work In Process, for a group of items identified by a product code. These account numbers are used during job material transactions, job labor transactions, and on entering a job into stock upon completion. Specify this information:

Material: Select the account to use for posting work in process material for the product code.
Labor: Select the account to use for posting Work In Process Labor for the product code.
Fovhd: Select the account to use for posting Work in Process Fixed Overhead for the current product code.
Vovhd: Select the account to use for posting Work in Process Variable Overhead for the current product code.
Outside: Select the account to use for posting work in process outside services for the current product code.

Use the Miscellaneous tab to set the accounts to which you want to assign costs for Work In Process, Inventory Adjustments, Fixed Material Overhead, and Variable Material Overhead for a group of items identified by a product code. Specify this information:

Inventory Adjustment

Select the account for the inventory adjustment account. This account number is used for purchase order receiving transactions and Inventory transactions.

Cycle Inventory Adjustment

Select the inventory adjustment account to be used when posting cycle count quantities. When you post a cycle count, this account number is used instead of the inventory adjustment account number.

Landed Cost Inventory Adjustment

Select the account for the landed cost inventory adjustment account. This account holds the amount of variance produced as an effect of vouchering landed cost PO receipts. The accounting that takes place is as follows:

LC Vouchered Amount < PO Estimated LC Cost
DB LC Payable CR LC Inv Adj (Actual Cost Type)
DB LC Payable CR LC Variance (Standard Cost Type)
LC Vouchered Amount > PO Estimate LC Cost
DB LC Inv Adj CR LC Payable (Actual Cost Type)
DB LC Variance CR LC Payable (Standard Cost Type)

Inventory Purchase

Select the account for the inventory purchase account. This field is enabled only if the Use Analytical Ledger field is selected on the General Parameters form.

Use the Variance tab to set the accounts to which you want to assign variance expenses for a group of items identified by a product code. Specify these accounts only if you are using Standard Costing. Specify this information:

Purchase Cost: Select the account for the purchase cost variance expense. This account number is used for both PO returns and closed transactions.
Freight Cost: Select the account for the freight cost variance expense. This account number is used for both PO returns and closed transactions.
Duty Cost: Select the account for the duty cost variance expense. This account number is used for both PO returns and closed transactions.
Brokerage Cost: Select an account for the brokerage cost variance expense. This account number is used for both PO returns and closed transactions.
Material Usage: Select the account for the material usage variance expense. This account is used for job material issues or withdrawals where the quantity issued/withdrawn is not equal to the standard quantity required.

Use the Overhead Variance tab to set the accounts to which you want to assign overhead expenses for a group of items identified by a product code. Specify these accounts only if you are using Standard Costing. These account numbers are used for job labor transactions where the actual hours do not equal the time it should have taken to complete the units. Specify this information:

Labor Fovhd Usage: Select the account number for the fixed overhead usage variance account.
Labor Vovhd Usage: Select the account number for the variable overhead usage variance account.
Matl Fovhd Usage: Select the account number for the fixed material overhead usage account.
Matl Vovhd Usage: Select the account number for the variable material overhead usage account.

Use the Applied Overhead tab to set the Fixed Material Overhead, and Variable Material Overhead rates for a group of items identified by a product code. These account numbers are used during job material transactions, during job labor transactions, and when you complete a job and put it into stock. Specify this information:

Matl Fovhd Applied: Select the account number for the fixed material overhead applied account. An additional percentage is applied to this account number for the handling of materials. This amount affects the job to which the item is being issued. Fixed rates do not necessarily increase as volume increases.
This field is enabled only if a rate is entered in the Fixed Material Overhead Rate field on the General tab.
Matl Vovhd Applied: Select the account number for the variable material overhead applied account. Variable costs are applied to this account. In contrast to the Fixed Material Overhead Account, this account handles costs that fluctuate according to volume changes.
This field is enabled only if a rate is entered in the Variable Material Overhead Rate field on the General tab.

Click Save.