Work Center Units of Measure in Microsoft Dynamics NAV 2013
It is quite common in processing industries, like chemical production, that the cost of Labor is not the primary cost of production. In chemical processing, the cost of energy or depreciation may be the largest cost component.
While Centers and Routings in Dynamics NAV are typically thought of in terms of Direct Cost (Labor) and Overhead, we can set up Work Centers and Routings to accommodate other cost components.
Using Dynamics NAV 2013, I set up a Work Center named ELECTRICITY. I set the Unit of measure to KWH, the Direct Unit Cost to .0485 per KWH, and the General Product Posting Group to ELECTRIC.
Figure 1 – Work Center ELECTRICITY setup in Microsoft Dynamics NAV
The Direct Cost Applied in the General Posting Setup is set to ELECTRIC TO INVEN.
Figure 2 – Set the Direct Cost Applied in the General Posting Setup to ELECTRIC TO INVEN.
We create an Item CHEMICAL and set up a Routing for it. Notice that the Work Center is ELECTRIC and that the Unit of Measure for the Run time is KWH.
Figure 3 – Item CHEMICAL with Routing; Work Center is set to ELECTRIC
We create a Released Production for the CHEMICAL Item, and, using the Dynamics NAV Production Journal, we record the use of 10,000 KWH of electricity.
Figure 4 – Released Production Journal for the CHEMICAL Item
These are the General Ledger entries as a result of posting the Production Journal. We can see that we got a Debit to WIP for 490.00 and a Credit to Electricity to Inventory for 490.00
Figure 5 – General Ledger entries as a result of posting the Production Journal
You can see that, with a bit of creative thinking, we can set up Dynamics NAV in a way to accommodate most industries and costing scenarios.
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