Getting started
Set up manufacturing settings
Choose the warehouses and GL accounts manufacturing uses in your branch, and the options that control reservations, consumption, traceability, posting and tolerances.
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In this article
Manufacturing settings tell the system where materials sit during production and which accounts carry their value. Complete them before you release the first work order. The settings belong to the branch you are working in, so a company with two factories sets them once per branch.
Before you start
Select the branch you want to configure. Without a branch the page shows Select a branch first to view or edit manufacturing settings.
Create the warehouses under Administration › Organization › Inventories and give each the right type: raw materials, work in progress, finished goods and, if you keep one, scrap.
The GL accounts must already exist in your chart of accounts as detailed (level-5) accounts of this branch.
Steps
Open Manufacturing › Costing & Reports › Manufacturing Settings.
In Warehouses, choose the four warehouses described below. Each list shows only warehouses of the matching type in your branch.
In GL Accounts, choose the accounts described below.
In Options, switch on the controls you want (see the table below).
In Costing, leave Costing method on Actual, and set Mass balance tolerance if you use the mass balance check.
Select Save.
The warehouses
Raw material warehouse: the default source that work orders issue materials from.
Work-in-progress warehouse: where issued materials wait until the order is completed.
Finished goods warehouse: the default warehouse that receives finished products.
Scrap warehouse: receives scrapped quantities. A scrap or a general warehouse can be used.
The accounts
Every branch needs the Raw material account, Work-in-progress account, Finished goods account and Labor cost account. Add the Manufacturing overhead account if your routings carry overhead rates, the Scrap expense account and Abnormal spoilage account if you record scrap, and the three variance accounts if you report variances.
The options
Option | What it does |
|---|---|
Auto-reserve materials | On by default. Releasing a work order reserves its components, so other orders cannot use the same stock. |
Auto-backflush materials | When on, each production report consumes the issued materials in proportion to the output. Completing an order always consumes the materials of the completed batch. |
Require material requisition | On by default. Output cannot be recorded beyond what the issued materials cover. |
Track lot numbers | Completion asks for a Lot number, which is stored on the order and on its quality inspections. |
Track serial numbers | Completion asks for a Serial reference in the same way. |
Post to accounting | The master switch for manufacturing journal entries. When off, only quantities move. |
Post on completion | When on, production cost entries post once at final completion instead of with every production report. |
Calculate variances | Stores planned-versus-actual material, labor and overhead variances on completed orders for reporting. No journal entry is posted. |
Allow over-production | Lets an order issue materials and record output above its planned quantity. |
Mass balance check | At completion, checks that the output weight does not exceed the weight of the issued materials, within the tolerance. It needs weights on every item involved. |
Common questions
Why does a warehouse not appear in the list? Its type does not match the role, or it belongs to another branch. Correct the type under Administration › Organization › Inventories.
Can one work order use different warehouses? Yes. The work order form lets you pick a Source Warehouse and a Destination Warehouse. The settings only supply the defaults and the work-in-progress and scrap warehouses.
Does the costing method change how cost is calculated? Finished products are always costed at the actual cost collected on the work order, which then updates the product's average cost. See How manufactured cost is calculated.