The operating method used for expense accounts posted through planned costs is displayed on the following charts:
Working Method for Account Group 71
710-Direct Raw Material 711-Direct Raw Material and Supply 712-Direct Raw Material and Supply
and Supply Expenses Expenses Transfer Account Expenses Price Difference Account
1 66 245
3 4
151-Production for Semi Finished Good 713-Direct Raw Material and Supply
Expenses Quantity Difference Account
24 5 5
Working Method for Account Group 72
720-Direct Labor 721-Direct Labor 722-Direct Labor
Expenses Expenses Transfer Account Expenses Rate Variance Account
1 44 235
3
151-Production for Semi Finished Good 723-Direct Labor
Expenses Efficiency Variance Account
2 3 5 5
Working Method for Account Group 73
730-Production 731-Production 732- Production
Overheads Overheads Transfer Account Overheads Budget Difference Account
1 44 235
3
151-Production for Semi Finished Good 733- Production
Overheads Capacity Variance Account
23 5 5
734- Production
Overheads Efficiency Variance Account
3 5
Note: Numbers 1 and 4 indicate actual amounts, 2 indicate standard amounts, and 3 and 5 indicate differences on the charts above.
This method may be used when "Planned Costs Will Be Used" is selected as the Cost Accounting Method in Administration Parameters. Planned and actual material slips resulting from the production order are posted. The G/L Code to be assigned to production-related material slips depending on slip type and cost calculation methods used in this method are as follows:
Finished good costs shall be debited in Input From Production Slips with the quantity of difference calculated if the overhead application is insufficient and if planned is less than actual (planned < actual). Therefore, difference accounts on Input from Production Slips are credited.
When differences are calculated, these accounts should first be debited in order to close difference accounts with credits on inputs from production. (The corresponding account is credited.)
Consequently,
In difference accounts located in the right mouse button menu of the production order,
Insufficient Application (Planned < Actual) ==> Debits the difference account, and
Excess Application (Planned > Actual) ==> Credits the difference account.
While on Input from Production Slips,
Insufficient Application (Planned < Actual) ==> Debits the finished product account and credits the difference account, and
Excess Application (Planned > Actual) ==> Credits the finished product account and debits the difference account.
Note: The chart above displays accounting differences resulting from insufficient overhead application (planned < actual). When the situation is reversed; transactions on account codes are reversed as well. The cost applied to finished goods in planned stage is less than the cost applied in actual stage. Finished product accounts had to be debited during the realization stage in order to obtain correct cost values.