One of the key business drivers when implementing NAV Manufacturing is its associated costing calculations and their impact on the G/L. NAV documentation mainly focuses the reader on Standard Costing, however it is important to note that NAV Manufacturing will also work with FIFO (First in First Out), LIFO, Specific and Average costing. NAV manufacturing costing is very powerful & flexible and a successful implementation requires all the NAV parameters to be filled in correctly and thoroughly tested by the business. Standard and FIFO are by far the most commonly used costing methods. Some of the considerations when reviewing manufacturing costing are:
- For the Standard Costing method, the actual recorded manufacturing costs are compared to the Item's pre-defined Standard Cost and the differences are recorded as material & capacity variances.
- For the FIFO costing Method, the actual recorded material and labour costs are aggregated into the final cost of the Item.
- Is the setup time to be included in the cost of the Item or recovered as a factory overhead?
- A number of parameters affect when values are posted to the G/L including:
- Setup of Expected Cost posting
- Automatic Cost Posting
- Flushing method - Forwards, Back or Manual
- The timely completion of the Released Production Order to move costs out of WIP