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Select Work Order Setup menu > Operation Code Maintenance.

Operation Code Maintenance provides you with flexibility in determining how costs and overhead are calculated and what general ledger accounts are used to post production costs. Operation codes define the various processes that are performed to manufacture the final product or parent item. Operation codes are defined separately for each work center to identify the factory or shop location at which operations are performed.

Note You must set up at least one operation code.

Each of the work centers defined in Work Center Maintenance is capable of performing one or more operations. Use Operation Code Maintenance to define these operations for each work center, enter standard cost rates for the operations, assign general ledger accounts associated with each operation to post production costs, and define overhead calculation rates. Maintaining this information for each operation code provides you with complete flexibility.

If labor is charged at the employee rate for a work center, the planned cost rate per hour is used only to calculate the planned cost. Actual cost is calculated using the rate entered in Production Employee Maintenance. The planned cost is normally used only for labor or machine operations. You do not need to enter a planned cost for outside process steps because the standard rate(s) can vary from work order to work order based on individual bids. Overhead can be applied to labor, material, and/or outside processing costs. By applying overhead based on hours, overhead is applied on labor only. By applying overhead based on cost, overhead is applied to labor costs plus any material and outside processing costs applied to this line.

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