One of DBA's major benefits is that it gives you a true manufacturing accounting system. All transactions related to sales, jobs, purchasing, and inventory, post to the DBA general ledger.
The DBA general ledger is supplied with a standard chart of accounts that is optimized for a manufacturing company. You simply cross-reference each of your existing accounts to its equivalent account in DBA and add your own accounts where needed.
In a true manufacturing accounting system like DBA, direct labor and manufacturing overhead costs are not immediately expensed. Instead, these costs are absorbed into job costs as you report job labor hours, and ultimately become part of each item's inventory cost as jobs get completed. Only when you sell the item are labor and overhead costs realized as a portion of the item's cost of goods sold.
Absorption costing of labor and overhead conforms to GAAP and IRS guidelines and aligns your revenues and costs so that you get accurate gross profit reporting without distortions.
Establishing hourly rates for absorbed labor and overhead is done here in the Shop Rates screen. The program compares actual costs for a recent date range with reported job hours and calculates an overall shop labor rate and overall shop overhead rate. These shop rates are then applied to your work centers, where they can be factored up or down for any exceptions.
Absorption costing of labor and overhead gives you an accurate work in process inventory, shown here on the Balance Sheet. Efficient manufacturing is measured by how much WIP and on hand inventory is required to support your sales. If you cannot accurately measure work in process, you have no means for measuring your progress.
Another benefit of the DBA general ledger is that your operational people are never exposed to accounting decisions. All accounting setup is done in advance here in the Account Assignments screen, under the control of your accounting department. Your non-accounting people can freely add items, customers, and suppliers, and enter sales orders and generate jobs and purchase orders without ever having to specify GL accounts.
In order to update the general ledger in your accounting system, the GL Transfer screen, here on the Financial Transfer menu, is used at period end to export cross-referenced account totals to your accounting system in a spreadsheet or text file format. All transaction detail remains in DBA for a complete audit trail.
Proper manufacturing accounting, with absorption costing of labor and overhead and the ability to accurately measure work in process, is essential to your manufacturing efficiency. The DBA general ledger addresses all manufacturing accounting issues and updates your general ledger with summarized account totals.