SM-C  Enter Item Classes

Purpose of Program

Item classes are used to organize your inventory into meaningful groups for various reports and for general ledger posting.  Item classes should be set up in advance of creating inventory records.  Every item number must be assigned to a item class.

If all inventory related GL posting will post to the default accounts established in AD-A  General Ledger Defaults, then only class master records need be created on the first screen of the SM-C program.  If non-default GL postings are needed for any Class, then a specific Class/Location record with GL Accounts must be created on the screen accessed when the Item Class GLs button is clicked.  Not all Master Class records will require Class/Location records with GL accounts defined.

Nine General Ledger account codes can be assigned to each item class (asset/expense, cost of goods sold, taxable sales, non -taxable sales, work-in-process, absorbed labor, absorbed fixed overhead, absorbed variable overhead and absorbed material burden).  The item class of the item determines how it gets posted to the General Ledger as various transactions occur throughout the system.  If any account is left blank in the Item Class, then the system default account as defined in AD-A  General Ledger Defaults will be used for GL posting.  GL Accounts need only be entered for those accounts that are exceptions to the system defaults.  If accounting is turned off in AI-B or the Permit use of Item Class GLs is set to N in AD-A  General Ledger Defaults , you will not have access to the GL Accounts in this program.  The material burden percentage can also be assigned by item class on this screen and represents the burden that will be applied to items belonging to the class when they are issued to work orders.

Besides GL posting, item classes are used as follows. IN-F  Print Inventory Value automatically subtotals by item class. SO-Q-F  Enter Discount Codes allows discount codes to be separately defined by item classes. IN-N-A  Print Month End Inventory Costing automatically subtotals by item class.   SA-L  Print Item class  and SA-M  Print User-Defined Detail and SA-N  Print User-Defined Summary provide sales analysis by item class.

Field Explanations

Item class

This is a four character, alphanumeric field, upper case only.  This is the code used to identify the item class.

Description

You may assign a 30 character description, alphanumeric, upper and lower case.  The description is used on various reports.

Location

If you are using multiple Locations (factories or warehouses) you can separately define the GL codes for each Location.  If you wish to do so, enter and save a separate record within the same item class for each Location.  If you are using Average Costing (defined in SD-H  Inventory Defaults) you can have different GL Asset/Exp and GL WIP accounts within the same item class for the different Locations.  If you are using FIFO or LIFO costing, the GL Asset/Exp and GL WIP accounts must be the same within a item class for all Locations.

GL Asset/Exp Acct

The General Ledger asset or expense account for all items in this item class.  When posting transactions (if inventory posting is switched on in AD-A  General Ledger Defaults) the cost of units received will be posted to the GL asset or expense account.

For items received into inventory or work-in-process, or for all manufactured items, the account entered here will be an asset account.  If you are setting up item classes for expense type items such as shop supplies, you should use an expense account instead.  When items from that class are received through PO-C  Receive Purchase Orders, the dollars will be recorded as an expense rather than an asset.  Items to be posted to an expense account should also be defined in IN-B Enter Inventory as type 'N', Non-Inventory.

GL COGS Acct

The General Ledger cost of goods sold expense account for all items in this item class.  When invoices are posted, the cost of goods sold amount (based on the Average Cost) will be posted to this account.  Inventory adjustments entered in IN-C  Enter Inventory Adjustments and IN-K  Adjust Physical Levels will also post to this account.

GL Taxable Sales Acct

The General Ledger sales account for all taxable sales in this item class.

GL Non-Taxable Sales

The General Ledger sales account for all non-taxable sales in this item class.

If you don't distinguish between taxable and non-taxable sales in your General Ledger, you may use the same account for both taxable and non-taxable sales.

GL WIP Inventory Asset

The General Ledger asset account for work-in-process inventory for all items in this item class.

GL Absorbed Labor

The General Ledger account for absorbed labor, normally an expense account adjacent to your direct labor expense account.  As transactions are entered through WO-F  Enter Labor or posted in DC-H  Post Labor Transactions  or WO-N  Post Labor Batches  or Type L (Labor) parts are issued to Work Orders in WO-G Issue Materials or by backflushing in WO-I  Enter Finished Production, labor costs are credited to this account and debited to the WIP account of the item being manufactured.  This account is an offset to the Direct Labor account debited when payroll is processed.

GL Absorbed Fixed OH

The GL account for absorbed fixed overhead, normally an expense account adjacent to your fixed overhead expense accounts.  As transactions are entered through WO-F  Enter Labor ,  or posted in DC-H  Post Labor Transactions  or WO-N  Post Labor Batches or Type L (Labor) parts are issued to Work Orders in WO-G Issue Materials or by backflushing in WO-I  Enter Finished Production, fixed overhead costs are credited to this account and debited to the WIP account of the item being manufactured.  This account is an offset to the debit balance in expense accounts associated with fixed overhead expenses.

GL Absorbed Variable OH

The GL account for absorbed variable overhead, normally an expense account adjacent to your variable overhead expense accounts.  As transactions are entered through WO-F  Enter Labor ,  or posted in DC-H  Post Labor Transactions  or WO-N  Post Labor Batches or Type L (Labor) parts are issued to Work Orders in WO-G Issue Materials or by backflushing in WO-I  Enter Finished Production, variable overhead costs are credited to this account and debited to the WIP account of the item being manufactured.  This account is an offset to the debit balance in expense accounts associated with variable overhead expenses.

 

General Program Operation

Select an existing Class from the opening list to edit its description or click Add to create a new one.  Enter the Class code and Description.  If GL Posting is turned off or this class does not need GL accounts defined differently than the system default accounts, no further action is needed and Items can now be assigned to this class in IN-B  Enter Inventory .

If you wish to assign GL accounts to any Item Class to override the system defaults, click the Item Class GLs button.  Enter the Class Code or use the Lookup button to select the desired class.  If you are using multiple Locations, enter or use the Lookup button to select the Location for which GL Accounts are to be defined.  System default GL Accounts are displayed on the right.  Enter any GL Account that needs to be defined differently from the system defaults for this item class.  Any account left blank on this screen will post to the system default account.

If you wish to copy the GL Accounts from another existing Item Class/Location, click Import GLs and select the Class/Location you wish to copy from.  The Clear GLs button will remove all GL Entries for the Class/Location and the Reset GLs button will reset the GL Accounts to their original values prior to any editing.  Once all desired accounts have been specified, click Save.

Copy Location

Use this screen to copy all the Item Class/Location records from one Location to another

Mass Create

Use this screen

Mass GL Change

Use this screen to globally change GL Accounts for a number of Class/Location records.  You can change the GL Accounts assigned to all Locations for a specific Class, all Classes for a specific Location or all classes for all locations.   Select the scope of changes desired, enter the desired accounts by clicking Review/Edit New GL Accounts, and click Save.

If You Are Using FIFO or LIFO Costing

If costing is set for either FIFO or LIFO costing in SD-H  Inventory Defaults, you must assign the same GL Asset/Exp and GL WIP accounts to all Locations within the same item class.  This is because the FIFO/LIFO file (which can be viewed through IN-L-H  Edit FIFO/LIFO Buckets) is company wide and not specific by Location. Without common asset accounts there could be discrepancies between the Location's inventory value (as shown on the Inventory Value Report) and its value in the General Ledger.

To Delete a Record

To completely delete an item class master for all locations, on the initial screen highlight the class and click the delete button.  To delete a Class/Location record, on the Item Class GLs screen, highlight the Class/Location record and click Delete.

You will not be allowed to delete a item class master that still has any items assigned to it.  You will have to reassign the items first, then delete the item class record.