• Home
• Free Version
• Demos
• Features
• FAQ
• Ask DBA
• Pricing
• Support
• Web Store
• About
• Contact

Accounting

Does DBA offer departmental accounting?

Yes it does, but in a completely different fashion than the way it is done in general (non-manufacturing) accounting systems.

General accounting systems typically offer the ability to designate department codes within sales orders, PO's, and supplier bills. This enables revenue and costs to be allocated to different profit centers, each represented by a department code.

This type of departmental coding is complicated to set up and maintain and is inherently error-prone because it relies on users being able to apply the correct codes and allocations.

Not only is it error-prone, but this type of departmental accounting is not suitable for manufacturing companies because direct labor and all your factory overhead expenses are not costs, but are investments in your inventory. Only when you sell your products are these costs realized on your income statement, in the form of cost of goods sold.

How do direct labor and factory overhead expenses become investments in inventory? This is done through "absorption" costing. When labor gets reported to jobs, a shop labor rate and factory overhead rate get applied to the job cost. As jobs are completed, finished products are received to inventory at job cost. Your "absorbed" costs for direct labor and factory overhead are thus incorporated in your inventory value. On your books, absorbed costs offset your actual costs and result in a "wash."

In DBA you have complete control over the GL posting of revenue and associated cost of goods sold. You have the option of organizing revenue and COGS by Item Category or Customer Type. GL accounts can be grouped and subtotaled by user-defined Account Groups.

So if your profit centers are in the form of product lines or families or different types of customers, you can get all the breakdowns and groupings you need of revenues and costs without using department codes. Posting is highly accurate because your users are not exposed to any coding or allocation decisions.

All your material purchases, subcontract purchases, direct labor, and factory overhead expenses are handled automatically by DBA's manufacturing accounting system and do not require departmental codes. What about the rest of your operating expenses?

In DBA, the standard chart of accounts is organized into these logical cost centers: Direct Labor, Factory Overhead, Sales & Marketing, Research & Development, and General & Administrative.

Direct Labor and Factory Overhead are handled by the manufacturing accounting system. Within the remaining cost centers, you are welcome to organize your GL accounts into as many sub-groupings or departments as you wish. Non-manufacturing payroll as well as PO's and supplier invoices for miscellaneous expenses can be allocated and posted to any GL accounts you wish, with as much account breakdown and account groupings as you need.

If you want customized reports by cost center or department comprised of selected revenue, COGS, and expense accounts, this is achieved using our GL Spreadsheet Generator.

← Back