These are set in the menu Administration | My Preferences in the web client. Note that there is no corresponding setting in the professional client.
There are three tabs with multiple sections under each to review and ensure they will affect scheduling in the way your organization prefers.
Tip
Even though these are user settings, they affect a schedule enough that they should be agreed upon and consistently used by all users in that database. A corporate standard should be documented and followed.
On the Global tab in My Preferences (web) or the User Settings (Optional Client/Pro), the following sections have an effect on scheduling:
General
Calculate performance and earned value information by cost or by labor units.
A fundamental decision must be made at your organization on how the project information will be reported in terms of progress in the schedule. One part of performance reporting is simply planned vs. actual, but overall it depends on the user preference Calculate...