Cost accounting was introduced in NAV 2013 and is quite an extensive module that can help you understand the costs of running your business.
There are five main components to cost accounting in NAV 2015.
Cost types are types of cost or what the kind of costs we have. The chart of cost types resembles the general ledger chart of accounts. Dynamics NAV will allow you to create a chart of cost types from your chart of account or you can create your own.
Cost centers determine where the costs are coming from. Departments and profit centers are examples of cost centers for costs and income respectively.
Cost objects are products, product groups, or services of your company. Think of them as your finished goods of your company that carry the costs.
Cost entries are sub-ledger entries to the general ledger. So when the general ledger is posted, cost entries are created in details that allows you to see how the cost is broken down and how it should be allocated (see cost allocations below). Dynamics NAV allows you to post to the cost entries automatically when anything is posted to the general ledger, or you can have it posted in batch on a daily or monthly summary posting.
The cost journal allows you to post cost and activities that don't come from the general ledger. For instance, you can post pure operational costs, internal charges, corrective entries, etc.
3. Cost Allocations
Allocations move costs and revenues between cost types, cost centers, and cost objects. Overhead costs are first posted to cost centers and later charged to cost objects. For example, this might be done in a sales department that sells several products at the same time. Direct costs can be directly allocated to a cost object, such as a material purchased for a specific product.
Each allocation consists of an allocation source and one or more allocation targets. You can allocate actual values or budgeted values by using the static allocation method that is based on a definite value, such as square footage, or an established allocation ratio of for example 5:2:4. You can also allocate actual values or budgeted values by using the dynamic allocation method with nine predefined allocation bases and twelve dynamic date ranges.
You can create as many cost budgets as you want. You can copy the cost budget to the general ledger budget and vice versa. You can transfer budgeted costs as actual costs.
Most reports and statistics are based on the posted cost entries. You can set the sorting of the results and use filters to define which data must be displayed. You can create reports for cost distribution analysis. In addition, you can use the standard account schedules to define how your reports for the chart of cost types are displayed.
If you like to know more about Cost Accounting in Dynamics NAV, don't hesitate to contact us.