Overview
In order to get a meaningful report on machine profitability from a management reporting perspective. We need to attribute a cost to all labour related to the machine. As labour can be a large part of the total cost for a machine. To do this we apply a notional hourly rate to the one or many labour products used in your business. Given that the true cost of labour is not known until you do your payroll run and that there is no way to allocate actual labour costs to particular machines. We do not want the notional labour cost to flow through to the profit and loss report. As a result we set the estimated costs on labour products to contra out in the general ledger. As a result your management reports can show a profitability by machine and your general ledger can show the true cost of labour from your payroll.
Procedure
You firstly need to have the general ledger cost of goods account to stand for each Labour category.
You can break up your labour cost in the chart of accounts by department or just have one overall general ledger account.
Then you need to set up the non product category for each one of these departments and assign the correct cost method of "Product Supplier Cost' , and general ledger account for the cost of goods and stock on hand account to point to the one general ledger cost of goods account.
When setting up the non stock product itself, ensure you have a costp1 on the product supplier. Then add the right Non Stock Product Category to this Labour type non stock product.
See example of set up below.