{"id":27647,"date":"2025-01-05T13:43:50","date_gmt":"2025-01-05T13:43:50","guid":{"rendered":"https:\/\/docs.daftra.com\/?post_type=user_manual&#038;p=27647"},"modified":"2025-03-13T09:26:48","modified_gmt":"2025-03-13T09:26:48","slug":"indirect-costs-associated-with-manufacturing-orders","status":"publish","type":"user_manual","link":"https:\/\/docs.daftra.com\/en\/user_manual\/indirect-costs-associated-with-manufacturing-orders\/","title":{"rendered":"Indirect costs associated with manufacturing orders"},"content":{"rendered":"<section class=\"wpb-content-wrapper\"><p>[vc_row][vc_column][vc_column_text css=&#8221;.vc_custom_1737277469678{margin-left: 200px !important;}&#8221;]<\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"e92b7705-3323-49e5-9b39-e9f885368bde\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>Direct costs are added directly within the manufacturing order or bill of materials when either is created. However, indirect costs must be added individually and assigned to a specific manufacturing order to be assigned exclusively to it or distributed across multiple manufacturing orders.<\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"50635435-0fab-44dc-8f42-945a86ad6afa\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"b8bc07db-7da3-4ea3-ba0e-f64223b2bc78\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>The indirect cost amount is added by creating a journal entry that documents the cost amount and its corresponding account in the chart of accounts.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\">\n<div class=\"flex items-center\"><\/div>\n<\/div>\n<\/div>\n<p>This guide outlines the process of adding indirect costs and how to distribute them among manufacturing orders.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/vc_column_text][vc_custom_heading text=&#8221;Indirect Cost Information and the Difference Between the Two Distribution Types&#8221; font_container=&#8221;tag:h2|font_size:28|text_align:center|color:%2304306b|line_height:2&#8243; use_theme_fonts=&#8221;yes&#8221; css=&#8221;.vc_custom_1737274548740{margin-left: 200px !important;background-color: #f6f9fc !important;border-radius: 4px !important;}&#8221;][vc_column_text css=&#8221;.vc_custom_1741857203886{margin-left: 200px !important;}&#8221;]<\/p>\n<div class=\"wpb_text_column wpb_content_element vc_custom_1735559957646\">\n<div class=\"wpb_wrapper\">\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"f88ced53-2219-4b2b-ac61-43abc4d1594a\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>Click on <strong>&#8220;Indirect Costs&#8221;<\/strong> under the <strong>&#8220;Manufacturing&#8221;<\/strong> dropdown in the main menu, then click on the <strong>&#8220;Add Manufacturing Orders Indirect Costs&#8221;<\/strong> button.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-32005 size-full\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/788ik.png\" alt=\"\" width=\"1536\" height=\"678\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/788ik.png 1536w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/788ik-300x132.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/788ik-1024x452.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/788ik-768x339.png 768w\" sizes=\"auto, (max-width: 1536px) 100vw, 1536px\" \/><\/p>\n<\/div>\n<\/div>\n<p>[\/vc_column_text][vc_custom_heading text=&#8221;Adding a New Indirect Cost&#8221; font_container=&#8221;tag:h2|font_size:28|text_align:center|color:%2304306b|line_height:2&#8243; use_theme_fonts=&#8221;yes&#8221; css=&#8221;.vc_custom_1737274603455{margin-left: 200px !important;background-color: #f6f9fc !important;border-radius: 4px !important;}&#8221;][vc_column_text css=&#8221;.vc_custom_1741857237454{margin-left: 200px !important;}&#8221;]<\/p>\n<div class=\"wpb_text_column wpb_content_element vc_custom_1736083998452\">\n<div class=\"wpb_wrapper\">\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"699adf02-2519-430d-b6a1-777bc081d3cd\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p><strong>Enter the indirect cost information:<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\">\n<div class=\"flex items-center\">\n<div class=\"flex items-center pb-0\">\n<ul>\n<li><strong>Account<\/strong>: Select the account from the chart of accounts that you want to associate with the indirect cost.\n<ul>\n<li>You can modify the chart of accounts and add a new account specific to this indirect cost, such as an electricity expense account. For more information on how to add a new account, refer to this\u00a0<a href=\"https:\/\/docs.daftra.com\/en\/tutorial\/adding-a-new-account-in-the-chart-of-accounts\/\">guide<\/a>.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Start Date:<\/strong>\u00a0Specify the start date for the transactions related to the indirect cost.<\/li>\n<li><strong>End Date:<\/strong>\u00a0Specify the end date for the transactions related to the indirect cost.<\/li>\n<li><strong>Distribution Type:<\/strong>\u00a0Choose how to allocate the indirect cost to the manufacturing orders, either by quantity or cost.\n<ul>\n<li>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"965bcd47-435e-4f36-a36d-de198e24395a\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>The difference between the two distribution types becomes apparent when assigning the cost to multiple manufacturing orders. However, if the indirect cost is assigned to a single manufacturing order, the full amount will appear as an indirect cost in the total cost report, regardless of the distribution type.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\"><\/div>\n<\/div>\n<\/li>\n<li>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"139f9273-b397-4067-8241-f6db23817553\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>If the distribution type <strong>&#8220;Based on Amount&#8221;<\/strong> is selected, this is what will happen:<\/p>\n<p>The system calculates the total cost of all manufacturing orders included in the indirect cost.<\/p>\n<p>then determines the cost percentage of each manufacturing order relative to the total cost of all these orders.<\/p>\n<p>Based on this percentage, the indirect cost is distributed among the manufacturing orders, with higher-cost orders receiving a larger portion of the indirect cost<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\"><\/div>\n<\/div>\n<\/li>\n<li>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"7c0dc50e-9f3e-4e7c-b129-26efde6b7af9\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>If the distribution type <strong>&#8220;Based on QTY&#8221;<\/strong> is selected, this is what will happen:<\/p>\n<p>The system calculates the percentage of the final product quantity for each manufacturing order relative to the total quantity of the final product across all these orders.<\/p>\n<p>Based on this percentage, the indirect cost is distributed among the manufacturing orders, with orders producing a larger quantity of the final product receiving a larger portion of the indirect cost.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\"><\/div>\n<\/div>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-32008 size-full\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/954uj.png\" alt=\"\" width=\"1536\" height=\"368\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/954uj.png 1536w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/954uj-300x72.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/954uj-1024x245.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/954uj-768x184.png 768w\" sizes=\"auto, (max-width: 1536px) 100vw, 1536px\" \/><\/p>\n<\/div>\n<\/div>\n<p>[\/vc_column_text][vc_message message_box_style=&#8221;3d&#8221; message_box_color=&#8221;alert-warning&#8221;]<\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"876ac808-565e-44cb-918f-e63288ca316d\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>The total cost for a manufacturing order is based on the total <strong>&#8220;Act. Cost&#8221;<\/strong> shown in the <strong>&#8220;Total Cost Report.&#8221; <\/strong>Therefore, if you want to include raw materials in the manufacturing order costs to ensure accurate distribution of indirect costs, make sure to receive the raw materials for the manufacturing order first.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/vc_message][vc_message message_box_style=&#8221;3d&#8221; icon_fontawesome=&#8221;fas fa-book&#8221;]<\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"09880e45-d128-4bbd-8726-403b6f9976fb\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>For more information about the <strong>&#8220;Total Cost Report,&#8221;<\/strong>\u00a0refer to this guide.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/vc_message][vc_custom_heading text=&#8221;Adding the indirect cost journal entry&#8221; font_container=&#8221;tag:h2|font_size:28|text_align:center|color:%2304306b|line_height:2&#8243; use_theme_fonts=&#8221;yes&#8221; css=&#8221;.vc_custom_1737277518077{margin-left: 200px !important;background-color: #f6f9fc !important;border-radius: 4px !important;}&#8221;][vc_column_text css=&#8221;.vc_custom_1741857435693{margin-left: 200px !important;}&#8221;]<\/p>\n<div class=\"wpb_text_column wpb_content_element vc_custom_1736084627580\">\n<div class=\"wpb_wrapper\">\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"c32c8012-8c1c-4790-888e-9f78e1fd4940\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>To define the indirect cost amount, you must first create a manual journal entry where you adjust the related debit and credit accounts and specify the entry amount. Then, you need to add this journal entry to the indirect cost. A single indirect cost may consist of one or more journal entries.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\">\n<div class=\"flex items-center\">\n<div class=\"flex items-center pb-0\" style=\"text-align: left;\">\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"f88ced53-2219-4b2b-ac61-43abc4d1594a\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>Click on\u00a0<strong>&#8220;Add Entry&#8221;<\/strong>\u00a0under the\u00a0<strong>&#8220;Accounting&#8221;<\/strong> dropdown in the main menu, then adjust the journal entry accounts, enter the amount, and then click the <strong>&#8220;Save&#8221;<\/strong> button.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<ul>\n<li>For more information on how to manually add a journal entry related to indirect costs, refer to <a href=\"https:\/\/docs.daftra.com\/en\/user_manual\/automatic-and-manual-journal-entries-in-daftra\/\">this guide<\/a>.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-32010 size-full\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78798o.png\" alt=\"\" width=\"1918\" height=\"908\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78798o.png 1918w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78798o-300x142.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78798o-1024x485.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78798o-768x364.png 768w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78798o-1536x727.png 1536w\" sizes=\"auto, (max-width: 1918px) 100vw, 1918px\" \/><\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"254244a4-e095-491d-90b6-8a2eb7df14dd\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>Go back to the indirect cost screen where the cost information was added, and select from the dropdown menu in the journal entry field the entry that represents this cost.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<ul>\n<li>The dropdown menu displays the journal entries related to the account selected from the chart of accounts during the time period associated only with this indirect cost<\/li>\n<li>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"776d9412-367f-4340-b2ab-23ab12af55d2\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>You can click on the <strong>&#8220;+Add&#8221;<\/strong> button and set multiple journal entries to the indirect cost.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\"><\/div>\n<\/div>\n<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-27676\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/4-2.png\" alt=\"\" width=\"1918\" height=\"317\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/4-2.png 1918w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/4-2-300x50.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/4-2-1024x169.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/4-2-768x127.png 768w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/4-2-1536x254.png 1536w\" sizes=\"auto, (max-width: 1918px) 100vw, 1918px\" \/><\/p>\n<\/div>\n<\/div>\n<p>[\/vc_column_text][vc_custom_heading text=&#8221;Allocate manufacturing orders for the indirect cost&#8221; font_container=&#8221;tag:h2|font_size:28|text_align:center|color:%2304306b|line_height:2&#8243; use_theme_fonts=&#8221;yes&#8221; css=&#8221;.vc_custom_1737280440552{margin-left: 200px !important;background-color: #f6f9fc !important;border-radius: 4px !important;}&#8221;][vc_column_text css=&#8221;.vc_custom_1737280981051{margin-left: 200px !important;}&#8221;]<\/p>\n<div class=\"wpb_text_column wpb_content_element vc_custom_1736084790437\">\n<div class=\"wpb_wrapper\">\n<ul>\n<li><strong>Manufacturing Order<\/strong>: Choose the manufacturing order to which you want to allocate the indirect cost.\n<ul>\n<li>You can click \u201c<strong>+Add<\/strong>\u201d if you want to distribute the indirect cost across multiple manufacturing orders.<\/li>\n<li>If you allocate the indirect cost to one manufacturing order, the full amount of the entry (expense) will be added to that order. If you allocate the cost to multiple orders, you\u2019ll need to choose the distribution type to adjust the proportion of the expense allocated to each order.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-27683\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/5-2.png\" alt=\"\" width=\"1438\" height=\"352\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/5-2.png 1438w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/5-2-300x73.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/5-2-1024x251.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/5-2-768x188.png 768w\" sizes=\"auto, (max-width: 1438px) 100vw, 1438px\" \/><\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"9fd9a729-1218-4afa-927b-62a661fc7f5d\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>After completing the indirect cost information, click the <strong>&#8220;Save&#8221;<\/strong> button.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"d07cb28d-c8f7-4814-88cd-c4d00748e6c9\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p><strong>To clarify how indirect costs are allocated to the assigned manufacturing orders with a practical example, follow these steps:<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/vc_column_text][vc_message message_box_style=&#8221;3d&#8221; message_box_color=&#8221;success&#8221; icon_fontawesome=&#8221;fas fa-bell&#8221;]<\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"226af41d-9a5e-4c7d-8f28-113f0ea7b275\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>In the following example, we have two manufacturing orders where we specified the type of overhead cost allocation as <strong>&#8220;Based on QTY.&#8221;<\/strong> The first manufacturing order involves producing 5 units of the final product, while the second manufacturing order involves producing 10 units of the final product. This means that the total quantity to be manufactured in both orders is 15.<\/p>\n<\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"2f74bb59-cbd2-49f1-a5da-e18d7b66887d\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>Using the calculator, we find that the percentage of the first manufacturing order (5) relative to the total quantity of both orders (15) is (33.333%).<\/p>\n<\/div>\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-32012 size-full\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/6778yuhj.png\" alt=\"\" width=\"1918\" height=\"733\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/6778yuhj.png 1918w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/6778yuhj-300x115.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/6778yuhj-1024x391.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/6778yuhj-768x294.png 768w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/6778yuhj-1536x587.png 1536w\" sizes=\"auto, (max-width: 1918px) 100vw, 1918px\" \/><\/p>\n<p>The amount of indirect cost (the entry) to be allocated to both orders is 1,000. When calculating the share for the first manufacturing order based on its percentage, which is 33.333%, we find the amount to be 333.333, as it automatically appears next to this manufacturing order in the <strong>&#8220;Indirect Cost&#8221;<\/strong> page.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-27689\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/7-2.png\" alt=\"\" width=\"1506\" height=\"338\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/7-2.png 1506w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/7-2-300x67.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/7-2-1024x230.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/7-2-768x172.png 768w\" sizes=\"auto, (max-width: 1506px) 100vw, 1506px\" \/><\/p>\n<p>Using the calculator, we find that the percentage of the second manufacturing order (10) relative to the total quantity of both orders (15) is (66.6667%).<\/p>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-32014 size-full\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/58urie.png\" alt=\"\" width=\"1918\" height=\"908\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/58urie.png 1918w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/58urie-300x142.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/58urie-1024x485.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/58urie-768x364.png 768w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/58urie-1536x727.png 1536w\" sizes=\"auto, (max-width: 1918px) 100vw, 1918px\" \/><\/p>\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>The amount of indirect cost (the entry) to be allocated to both orders is 1,000. When calculating the share for the second manufacturing order based on its percentage, which is 66.6667%, we find the amount to be 666.666666, as it automatically appears next to this manufacturing order in the <strong>&#8220;Indirect Cost&#8221;<\/strong> page.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-27693\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/9-2.png\" alt=\"\" width=\"1468\" height=\"345\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/9-2.png 1468w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/9-2-300x71.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/9-2-1024x241.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/9-2-768x180.png 768w\" sizes=\"auto, (max-width: 1468px) 100vw, 1468px\" \/><\/p>\n<p>The same principle is applied when selecting the <strong>&#8220;Based on Amount&#8221;<\/strong> distribution type, replacing the quantity of the final product with the actual cost of the manufacturing order.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/vc_message][vc_custom_heading text=&#8221;Bulk Addition of Manufacturing Orders&#8221; font_container=&#8221;tag:h2|font_size:28|text_align:center|color:%2304306b|line_height:2&#8243; use_theme_fonts=&#8221;yes&#8221; css=&#8221;.vc_custom_1737283028681{margin-left: 200px !important;background-color: #f6f9fc !important;border-radius: 4px !important;}&#8221;][vc_column_text css=&#8221;.vc_custom_1741857672621{margin-left: 200px !important;}&#8221;]<\/p>\n<div class=\"vc_element vc_vc_column_text\" data-tag=\"vc_column_text\" data-shortcode-controls=\"[&quot;edit&quot;,&quot;clone&quot;,&quot;delete&quot;]\" data-model-id=\"ec46e9af3149e02b97c6d8a05de7715f\">\n<div class=\"wpb_text_column wpb_content_element vc_custom_1736085118732\">\n<div class=\"wpb_wrapper\">\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"fb432641-0385-4eb3-8402-b8b4be9111e4\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>Instead of manually adding multiple manufacturing orders to allocate indirect costs, go to the Manufacturing Orders section within the Indirect Costs screen and click the <strong>&#8220;Bulk Add&#8221;<\/strong> button.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-27697\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/10-1.png\" alt=\"\" width=\"1915\" height=\"742\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/10-1.png 1915w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/10-1-300x116.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/10-1-1024x397.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/10-1-768x298.png 768w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/10-1-1536x595.png 1536w\" sizes=\"auto, (max-width: 1915px) 100vw, 1915px\" \/><\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"a97a5105-1f3b-457f-a3fd-4769cf54a45b\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>Enter the final product(s) for which manufacturing orders need to be added, select the <strong>&#8220;Date Range&#8221;<\/strong> that includes these orders, and then click the <strong>&#8220;Search&#8221;<\/strong> button.<\/p>\n<p>&nbsp;<\/p>\n<p>The manufacturing orders associated with the final product will appear. Select the desired orders and click the <strong>&#8220;Add&#8221;<\/strong> button.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-32016 size-full\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78iu.png\" alt=\"\" width=\"1918\" height=\"911\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78iu.png 1918w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78iu-300x142.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78iu-1024x486.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78iu-768x365.png 768w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/78iu-1536x730.png 1536w\" sizes=\"auto, (max-width: 1918px) 100vw, 1918px\" \/><\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"3d7cb390-6f60-482a-ac16-98f308524653\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>After clicking the <strong>&#8220;Add&#8221;<\/strong> button, all the manufacturing orders you added in bulk will appear, eliminating the need to add each one manually.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-27702\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/12.png\" alt=\"\" width=\"1900\" height=\"438\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/12.png 1900w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/12-300x69.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/12-1024x236.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/12-768x177.png 768w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/12-1536x354.png 1536w\" sizes=\"auto, (max-width: 1900px) 100vw, 1900px\" \/><\/p>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/vc_column_text][vc_custom_heading text=&#8221;Displaying Indirect Cost in the Total Cost Report&#8221; font_container=&#8221;tag:h2|font_size:28|text_align:center|color:%2304306b|line_height:2&#8243; use_theme_fonts=&#8221;yes&#8221; css=&#8221;.vc_custom_1737285300571{margin-left: 200px !important;background-color: #f6f9fc !important;border-radius: 4px !important;}&#8221;][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text css=&#8221;.vc_custom_1741858002131{margin-left: 200px !important;}&#8221;]<\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"650a542b-5c0f-455c-ab36-b4a79620e341\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>The portion allocated to the manufacturing order appears in the <strong>&#8220;Total Cost Report&#8221;<\/strong> tab within the manufacturing order file. If you wish to view the indirect costs assigned to the manufacturing order, click on this tab in the manufacturing order file, where you will find it listed under the<strong> &#8220;Indirect Expense&#8221;<\/strong> section.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\">\n<div class=\"flex items-center\">\n<div class=\"flex items-center pb-0\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-32018 size-full\" src=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/578.png\" alt=\"\" width=\"1918\" height=\"911\" srcset=\"https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/578.png 1918w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/578-300x142.png 300w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/578-1024x486.png 1024w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/578-768x365.png 768w, https:\/\/docs.daftra.com\/wp-content\/uploads\/2025\/01\/578-1536x730.png 1536w\" sizes=\"auto, (max-width: 1918px) 100vw, 1918px\" \/><\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/vc_column_text][vc_message message_box_style=&#8221;3d&#8221; icon_fontawesome=&#8221;fas fa-book&#8221;]<\/p>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"09880e45-d128-4bbd-8726-403b6f9976fb\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>For more information about the <strong>&#8220;<a href=\"https:\/\/docs.daftra.com\/en\/user_manual\/view-total-cost-report\/\">Total Cost Report<\/a>,&#8221;<\/strong>\u00a0refer to this guide.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/vc_message][\/vc_column][\/vc_row]<\/p>\n<\/section>","protected":false},"author":13,"template":"","categories":[2177,7314,7262],"tags":[7390,8068],"class_list":["post-27647","user_manual","type-user_manual","status-publish","hentry","category-inventory","category-indirect-costs","category-manufacturing","tag-indirect-costs","tag-manufacturing-costs"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v17.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Indirect costs associated with manufacturing orders - Daftra Knowledge Base<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/docs.daftra.com\/en\/user_manual\/indirect-costs-associated-with-manufacturing-orders\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Indirect costs associated with manufacturing orders - Daftra Knowledge Base\" \/>\n<meta property=\"og:description\" content=\"[vc_row][vc_column][vc_column_text css=&#8221;.vc_custom_1737277469678{margin-left: 200px !important;}&#8221;] Direct costs are added directly within the manufacturing order or bill of materials when either is created. 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