---
title: "Production Costing"
canonical: "https://wiki.soft1.eu/space/SS5EN/12060431/Production%20Costing"
format: markdown
---
Before running job Production costing, you must first run the following jobs: 

**Cost price calculation** and **Costing levels.**

 

## Cost prices job 

Before starting the costing job, you must execute Cost price calculation using the respective job in the Inventory module, for the period to be costed, in order to allocate costs to Raw materials. 

Note: you must not select parameter <Includes costing transactions>.

 

![image](media://482d3f33-5709-4227-8176-0f130dcebcee)

## Costing levels 

![image](media://47fc461e-800c-49fd-be68-7124d3fa8a13)

This job sorts products in the correct order (from the semi finished to the final products) in order to be properly costed.

It finds the bills of materials of the main products and the bills of materials of semi-finished products that participate in the main ones as consumables and provides ascending numbering to them, based on which they must be costed. The Depth of the semi-finished products depends on the production stages of each company. 

 

## Production costing job 

![image](media://417bbc4c-59c2-4a62-b7e4-cb8195959a13)

 

For the production costing process, the process described below is followed: 

- The period to be costed is selected.
- Parameter <Update inventory> is selected in order to create the value inventory documents (those set in general parameters).
- Parameter <Update accounting> is selected in order to create the cost accounting entries (those set in general parameters).
- Parameter <Check accounting> is selected in order to check whether the accounts completed in the items are actual and transacting.
- Parameter <Check period costing> is selected in order for the application to check that the selected costing period is not already costed, and that there are no previous un-costed periods.
- Parameter <Has been counter balanceds> is selected in case there has been a prior cost counterbalancing job.

These operations must be run simultaneously, thus all parameters are selected together in order to run costing in its totality. 

 

## Production Costing without Cost Accounting

In case a company does not have cost accounting, but job Production Costing (Cost Accounting Production) exists, there are two methods to execute costing:

A) To post the values of cost data in each production document manually, so that during costing there are values to be allocated.

B) To use job <Production> <Costing> <Allocating cost to documents>, through which the user provides a specific value for each costing data and the job allocates these values to the production documents, in accordance with the costing data and the units that appear on each production document.

![image](media://80eec6d3-05a0-485d-ba1f-221d53c76f19)

 

Note: Parameter **Uses price** in the production document type must have the indication **Cost price**. 

In case production costing job does not exist at all, the production documents configuration must be as follows:

In addition, in this case IT IS NOT possible to monitor semi-finished products. 

- Main product: Inventory [In] qty (+), Inventory [In] value (+), Invoiced Inventory [In] qty (+), Invoiced Inventory [In] value (+), production quantity (+), production value (+). The same transaction shall be executed by the co-product and by-product.
- Consumption transaction: Inventory [Out] quantity (+), Inv. [Out] value (+), Invoiced. Inventory [Out] quantity (+), Invoiced Inv. [Out] value (+), consumption quantity (+), consumption value (+).
- Parameter Uses price in the production document type must have the indication Cost price

Moreover, in each of the above two cases you must run job <**Cost price calculation**> <**Document cost price revaluation**> for the production documents in order for the Raw material to receive the correct cost price at the end of the period.

 

**After running the costing job **

After production costing you must run again Cost price calculation for the period costed, in order for the products to receive a cost. This time, you must select parameter <Includes costing transactions>. 

 

## Operating Results check & aggreement

Production costing creates two (2) documents in Inventory on the last date of the costing period.

- Production value with three lines per item, one containing the consumptions value, one with the labor costs value and one with the G.P.C. value.
- Consumption values, where the total value must agree with the total production value minus the value of labor and G.P.C. value.

 

Production costing creates three (3) entries in Cost accounting, on the last date of the costing period:

- Charging, where P  is the balance of * 92 (of the costing data which must agree with the value of AΕ and G.P.C. in the Stock ledger) and P  is for 93 * of the production costs (from items file).  That is, it must match with the document (Production value) total minus the document (Consumptions value) total.
- Allocation, where C is 94 * (the total direct materials in the stock ledger) for the consumptions and P is 93 * of the production costs (from items file).  That is, it must match with the document (Production value) total minus the value of AE, G.P.C.
- Production cost, where P  is the production cost of P 93 * (consumptions value + AE. G.P.C. cost = total cost in the stock ledger) and X is 94* of products stocks (from the items file).  That is, it must match with the total indicated in document (Production value).