9.11.4. Cost Categories

9.11.4.1. Cost Category

Cost Categories are applied to Item Sites as a mechanism for specifying how Costs should be distributed to the General Ledger whenever Inventory is received, moved, consumed, produced, shipped, scrapped, or returned. To access the master list of Cost Categories, select the "Cost Categories" option.

Cost Categories Master List

Note

Cost Categories define Cost distributions for Inventory Items. The distribution of Costs for non-Inventory Items are determined by Expense Categories.

The "Cost Categories" screen displays information on all existing Cost Categories, including Cost Category code and Cost Category description.

To the far right of the screen, the following buttons are available:

CLOSE: Closes the screen, returning you to the application desktop.
PRINT: Runs the report associated with this screen.
NEW: Opens screen for creating a new Cost Category.
EDIT: Enables you to edit highlighted Cost Categories. The edit screen is the same as that for creating a new Cost Category—except that when editing, the fields will contain Cost Category information. Double-clicking on a Cost Category will also bring you to the editing screen.
VIEW: Highlight a Cost Category and then select this button to reach a read-only view of the "Edit" screen.
COPY: Highlight a Cost Category and then select this button to reach a screen for copying the Cost Category master.
DELETE: Highlight a Cost Category and then select this button to remove the category from the list.

Right-clicking on a Cost Category in the Cost Categories list enables you to select from the following menu options:

Edit Inventory Cost Category: Enables you to edit highlighted Cost Categories. The edit screen is the same as that for creating a new Cost Category—except that when editing, the fields will contain Cost Category information. Double-clicking on a Cost Category will also bring you to the editing screen.
View Inventory Cost Category: Highlight a Cost Category and then select this button to reach a read-only view of the "Edit" screen.
Delete Inventory Cost Category: Highlight a Cost Category and then select this button to remove the category from the list.
List Items in this Inventory Cost Category: Select to display Item Sites using the specified Cost Category
Export Contents: Export the data displayed on the screen into a plain-text, TAB-delimited file. This file may subsequently be imported into a spreadsheet or other office tool.

9.11.4.1. Cost Category

To create a new Cost Category, select the NEW button. The following screen will appear:

Create New Cost Category

Tip

The Account Numbers assigned to Cost Categories should not all be the Inventory Account. Instead, they should be individual accounts selected specifically for each Cost-tracking purpose. This will increase your visibility into your Inventory Costs and valuation.

When creating a new Cost Category, you are presented with the following options:

Category: Enter the Cost Category name.
Description: Enter a brief description of the Cost Category.
Inventory Asset: Identify a General Ledger (G/L) Account to distribute Inventory assets to. This is an Asset Account. It will be debited when Inventory is received and credited whenever Inventory Items are removed from Inventory.
WIP Asset: Identify a General Ledger (G/L) Account to distribute work-in-process (WIP) assets to. This is an Asset Account. It will be credited and/or debited with labor, material, and overhead Costs while a Work Order is in-process. The sense of the transaction record depends on the circumstances of the transaction.
Inventory Cost Variance: Identify a General Ledger (G/L) Account to distribute Inventory Cost variances to. This is an Asset Account. It is used in several scenarios: 1) If there is a difference between new Actual Cost and old Standard Cost when posting Actual Costs to Standard; 2) during Work Order processing if too many materials are issued to a Work Order, or if a Work Order is closed without the full quantity being posted; or 3) when posting cycle counts there is a difference between the new counted quantity and the quantity recorded in the system. The sense of the transaction record depends on the circumstances of the transaction.
Transform Clearing: Identify a General Ledger (G/L) Account to distribute Transform transactions to. This is an Asset Account. It will be credited when a source Item quantity is transformed, and debited for an equal amount when the target Item quantity is received into Inventory.
Purchase Price Variance: Identify a General Ledger (G/L) Account to distribute purchase Price variances to. This is an Asset Account. It will be credited or debited with the value of any variance that may arise when a Voucher is posted. The sense of the transaction record depends on the circumstances of the transaction.
Inventory Adjustment: Identify a General Ledger (G/L) Account to distribute Inventory adjustments to. This is an Expense Account. It will be credited or debited with the value of any variance that may arise when a Miscellaneous Adjustment transaction or Cycle Count transaction is posted against an Item. The sense of the transaction record depends on the circumstances of the transaction.
Inventory Scrap: Identify a G/L Account to distribute Inventory Scrap to. This is an Expense Account. It will be credited when a Scrap transaction is posted against an Item.
Manufacturing Scrap: Identify a G/L Account to distribute Manufacturing Scrap to. This is an Expense Account. It will be credited when Work Order Material Requirements are scrapped from a Work Order.
Labor and Overhead Costs: Overhead Costs: Identify a General Ledger (G/L) Account to distribute labor and overhead Costs to. This is a Liability Account. It will be debited and/or credited with labor and overhead Costs when Work Orders are in-process or posted. The sense of the transaction record depends on the circumstances of the transaction.
P/O Liability Clearing: Identify a General Ledger (G/L) Account to distribute Purchase Order liability clearing to. This is a Liability Account. It will be credited when a Purchase Order Receipt is posted and debited when a Voucher is posted.
Shipping Asset: Identify a General Ledger (G/L) Account to distribute shipping assets to. This is an Asset Account. It will be debited with the Standard Cost of a Sales Order Item when the Item is issued to Shipping and credited once the Item has been shipped.
Line Freight Expense: Identify a General Ledger (G/L) Account to distribute Purchase Order or Transfer Order Line Item freight expenses to. This is an Expense Account. It will be debited when Purchase Order or Transfer Order Line Items are received. The Account may be debited or credited when correcting Purchase Order Receipts.
Transfer Order Liability Clearing: Identify a General Ledger (G/L) Account to distribute Transfer Order Liability Clearing to. This is a Liability Account. It is used for recognizing liability related to transportation costs related to Transfer Orders. It will be credited when Transfer Orders receipts having freight charges are posted. It should be debited when the Freight (or other Vendor) is paid by Miscellaneous Check.

To the far right of the screen, the following buttons are available:

CANCEL: Closes the screen without creating a Cost Category, returning you to the previous screen.
SAVE: Creates the Cost Category and adds it to the master list of Cost Categories.