Miscellaneous Charge Codes

The way miscellaneous charges are added into a bill's total cost is directly affected by the type of miscellaneous charge code used. A miscellaneous charge can be a setup or a nonsetup charge. This is determined by whether the Setup Charge check box is selected or cleared in Miscellaneous Item Maintenance.

Setup Charges

Setup charges, also known as per-lot charges, allow you to specify a standard cost amount to be charged per production run. For example, if 2 hours of setup labor are necessary to prepare for production, producing 10 items still requires only 2 hours of labor. Tool changes and general setup costs represent two common setup charges.

The amount specified in the Standard Unit Cost field in Miscellaneous Item Maintenance represents the total cost associated with the charge, regardless of the number of parent items produced. This amount is debited to the parent Inventory account and credited to the Charge account specified in the Charge Account field. Because the same cost amount is allocated to inventory, regardless of the number of items produced, the unit cost per parent item is reduced as the number of parent items produced is increased.

Nonsetup Charges

Nonsetup miscellaneous charge codes allow you to define a standard cost amount to be charged for each parent inventory item produced. In this way, production, labor, and other costs can be treated in the same manner as component inventory items. For example, if 2 hours of labor are necessary to assemble a single bill, producing 10 items requires 20 hours of labor.

The amount specified in the Standard Unit Cost field in Miscellaneous Item Maintenance is multiplied by the quantity per bill and by the quantity of parent items produced. This total cost amount is debited to the parent Inventory account and credited to the Charge account specified in the Charge Account field. Because the total cost incurred increases as the number of parent items produced increases, the unit cost per parent remains fixed.

Manual Charges

Bill of Materials Maintenance, Production Entry, and Disassembly Entry allow you to enter miscellaneous charges directly without using a previously defined code. You must enter /M in the Component Item Code field on the Lines tab in Bill of Materials Maintenance, Production Entry, and Disassembly Entry to manually enter a miscellaneous charge.

This type of manually entered charge is treated in the same manner as the per-parent miscellaneous charge code. All information, including the description, charge account, unit of measure, and unit cost, must be specified during data entry.

For more information, see Miscellaneous Item Maintenance.