If you have a warehouse and employ workers to assemble widgets that you sell. You need to track costs associated with employee labour, warehouse machines, and overhead associated with each work order. There are eight cost categories that you have to choose from. They are:-
- Labour Setup – cost of time for labour to set up a run. For example, this is a cost of paying an employee to set up the machine that will be used to paint a widget.
- Labour Run – cost of the time for labor to run an assembly. For an example, this is the cost of paying employee to use the machine that paints the widget during the assembly run.
- Machine Setup – that’s the cost of time spent to set up a machine to be used in a run. For example, each time you’ve setup a machine that paints the widget, wear and tear costs you $0.02.
- Machine Run – cost of time spent to run a machine during assembly. For example, each time you use the machine that paints the widget for an assembly run, wear and tear cost you $0.04.
- Labour Setup Overhead – the cost of overhead associated with the labor to set up a run. For example, this is safety training expense incurred for an employee who sets up the machine used to paint the widget.
- Labour Run Overhead – that is the cost associated with labor to run an assembly. For example, this is a safety training expense incurred for an employee who completes the assembly run.
- Machine Setup Overhead – this is the cost of overhead associated with setting up a machine used in a run. For example, this is the water expense incurred by running the machine during the machine setup.
- Machine Run Overhead – that’s the cost of overhead associated with running a machine during assembly. For example, this is the water expense incurred by running a machine during an assembly run.
To create the cost categories :-
Navigate to Setup > Accounting > Accounting Lists > Cost Category > new