I’m just learning about the usefulness of Cost Centers. My company sells high-priced, low volume items. We run every order as a project because they take months to complete.
I’d like to be able to get reports on the costs of a project, and also reports on the costs of individual products regardless of project. Can I create a Cost Center for each project AND a cost center tree for our products and attribute income and expenses to both at the same time?
@Dbone, in fact no, and will be extremelly complicated to manage that, but, ERPNext allow you to get statistics joining “Cost Centers”, “Projects” and “Items” one example is the “Sales Register” report.
Usually, “Cost Centers” are betters to distribute a cost of a service (Eg: wather, eletricity, renting) against some areas of the organization (“Cost Center”) to you manage they budget.
It’s usefull in Accounting Projects (that’s not the same project, but can work in ERPNext), where do you will imobilize the final product, or get a long depreciation asset, like a building, a purchase of a new machinary etc).
In that case that are you looking for, I belive that a project, and the cost centers agains orders, can solve your case, of course, do you will need to tabulate your data.
For some specific cases, when you have “stock items”, you can assign a “cost of cost center” per item, in the item basis. but again, do you need to tabulate your data, to use information from Stock GL and General Ledger.
Thanks for the response, but I’m a little confused still:
It looks like the Profit and Loss Statement can be filtered by Cost Center and by Project. Couldn’t I then get a breakdown of the profitability of a particular project OR get a breakdown of the profitability of a product regardless of project?
@Dbone, the point is Cost Center for products is not recognized in Journal Entry or Sales Transaction, it’s managed by Stock Transactions!
In the Journal Entry you are entering a Project and Cost Center to book the costs, but it’s not related with the items, it’s related with the transaction (Order or Invoice)
To get reports with cost-centers by items, do you need, to make a custom report, that consolidate this detail from Stock module and Accounts module. because it’s not provided in the box, but the pieces are already in the box!
I’m still missing something. Our final products are large BOM’s of many smaller items. Every Sales Order we make has it’s own project as well. Since every Item can have a default Cost Center and Account both for income and expense why can’t I make a cost center tree identical to my BOM for one of our final products. Every time I sell a final product I attribute that journal entry as income to the top level folder of my cost center tree, and as I’m building the product all the invoices get attributed to actual items in the cost center tree. At the same time each journal entry also gets tagged with the project number.
Can’t I then get a P&L on the final product which is the top level folder of the cost center tree? Couldn’t I also filter the P&L by project then?
I’m really sorry if I’m missing something fundamental here. I’m not an accountant so some of these concepts are new to me.