Manufacturing Overhead Rate

headley27

Hello,

We are currently attempting to add miscellaneous one time charges (transport, etc) to the cost of production orders without success. We are trying to use the Overhead Rate field on the Production Order Line.

When a value is added to the Overhead Rate field the value is reflected in Production Order Statistics. However, it does not transfer to the Finished Production Order upon Output, and the value is not reflected in the Value Entry nor GL Entry Tables. We have also run the Adjust Cost - Item Entries procedure afterwards, again without success.

We simply want to show these additional charges to determine true profitability.

Are we missing something simple? Where does this value go?

Any information would be greatly appreciated.

Thank you.

AdamRoue

What costing method are you?

Is the order new after the overhaed uplift?

What version are you on?

headley27

AdamRoue wrote:

What costing method are you?

Average

AdamRoue wrote:

Is the order new after the overhead uplift?

I am not sure what this means.

Our typical process is as follows:
1. We plan our Released Production Order from our Sales Order.
2. Released Production Order Items are spawned from a Production BOM.
3. When the Production Order Line is physically finished and is ready to ship we perform output on the Production Order Line, therefore creating the Finished Item, placing it into Inventory.
4. When all Production Order Component Items are finally costed, consumption is performed on the Released Production Order.
5. Cost Adjustment Procedures are run so that costs are moved from expected to actual within the Value Entry Table.

Sometimes there are additional overhead expenses to produce the Finished Item, but we currently have no ability to add the additional cost so that it is tied to the Finished Item via the Production Order.

AdamRoue wrote:

What version are you on?

5.0 (No Service Pack)


Thanks again.

AdamRoue

What I mean is are you adding the overhead rate to the item card AFTER you create the production order?

headley27

Thank you for your reply.

No we are not. We do not want the additional charge associated with the item as it is a one-time cost.

Am I wrong in assuming that this will always associate the rate with the item?

If so, why do I need to enter the value in two places?

AdamRoue

Lets start again

You are entering a value in teh overhead rate hoping that upon the finishing of production this will add this value to the cost of the item along with the labour and material used - is this correct?

You have entered a value on the item card and it is being ignored - is this correct?

headley27

Hi AdamRoue,

No, we are not entering the value on the Item Card (Table 27, Field 99000757).

We are only adding it on the Released Production Order Line (Table 5406, Field 99000765).

This would be a one-time cost (i.e. rush courier charge).
It would apply only to the current Production Order, and not against future Production Orders.

Does this clarify the situation?

Thanks again.

AdamRoue

So you have added this as a modification to the production line? As standard this is hidden as it applied from the item.

You would need a developer to verify when this field is referenced and how it is referenced in the costing, I am not sure if it is on the individual order from what you are saying. Just bringing forward a field does not mean it will work depending upon how the field is referenced and used.

I added the field myself and entered a value, obviously refreshing the order removes the entered value. I then completed production and nothing was posted - also interstingly the finished order had the overhead rate as 0. If I enter the overhead rate onto the item this pushes through and all the costs correctly.

This leads me to believe you need to do a lot more with the costing rather than modifying the order to contain teh overhead rate for entry.

Not being a developer you will need to ask the question again, but differently knowing now what you want to do!

headley27

Yes, I made the field visible on the Released Prod. Order Lines Form (99000832) in a development database.
The Navision Help File led me to the existance of the field.

I am surprised that whoever developed this function would require it to flow down from the Item (and only the Item).
As you can see, the charges I mention are not item-specific, nor are they BOM-specific. They are specific to a single Production Order.
I would think that unexpected costs (like rush charges or additional machining costs) are not all that uncommon. This blows my mind. :shock:

I'll have to modify the system so that it functions the way we want it to.

Thank you AdamRoue. I appreciate your effort and explanation to my question.

AdamRoue

Well what you are doing here is adding additional cost to the item.

This does not affect a "rush charge" which would be passed onto the client separately.

I would also expect the additional machining costs to be captured in the production journal.

The idea of the overhead rate is to add in the overhead the material and labour elements do not capture to uplift your cost. This makes it item based by nature.

You are trying to use the standard functionality for something different. I am not pleased the charge gets re-read at posting from the item card, but I suppose as it is item related and you do not see it as standard it is acceptable, and when you mod it you need to modify the entire routine

kiwilamb

I know this is an old post but what was the solution for this?
I have the same issue with production orders where the manufacturing variance shows up in the statistics but the value entry and the GL entries are a combined value.