The following describes how to calculate the cost of sub-assemblies and end items online, and how to update the Item file with the calculated standard cost value. This calculation is performed to check the cost before the actual production.
The purpose of this program is to get an overview of an item calculated product costing. You can view included material costs, operations cost and product overhead. It is also possible to create a new bill of material and bill of routing from an updated product costing calculation.
The result of the product costing calculation is a standard cost value. The standard cost is referred to as the estimated cost for items or orders. The actual cost is the cost of producing the item on a manufacturing order, which is calculated when the order is closed.
Prerequisites
The following parameters and files must be completed before the cost calculation and update is performed:
- The item must be defined in the Item file.
- The bill of material must be defined in the Structure file.
- Status item cost in the Item file must be set to BLANK or 9 (Calculation demands). Note: If this field is set to 1 (Manual calculation), the standard cost will not be updated by the Product costing program.
- Select the Calculate product cost menu item.
- You access Product costing online selection where you define the calculation date and the item to be calculated. You also have to specify if you want to update the cost price or perform a simulation. Complete the following fields
- Calculation date
- Enter the date on which the cost calculation should be based. The system retrieves the costs and times for the selected date. Note: If the purpose of the calculation is to update standard cost on item the calculation must be set to the current date.
- Item
- Enter the item for which you want to calculate the cost. This can be a sub-assembly or an end item.
- Simulate std qty ll
- Indicate if you want to simulate standard quantity for lower levels. For this task, set this field to NO.
- Calc cost max dec
- Indicate how many decimals should be used in the basic data product costing. If you set this field to YES, the standard cost will be calculated and displayed with 6 decimals (maximum decimals). If you set this field to NO, the number of decimals defined for the system currency in Work with currencies will be used in the calculation of the standard cost.
- Calc with std qty PC
- The default value in this field is retrieved from the MFG control file. Indicate if the standard cost should be calculated using the Standard quantity PC instead of the Stock unit from the Item file. If you set this field to YES, the product costing element will be presented according to the standard quantity for PC, but the update to the Item file will be made by stock unit.
- Cost model
- Enter the cost model to be used in the calculation.
- Display unit
- Enter the value for stock unit or structure unit denoting in what unit the quantities should be presented. Permitted values are 1 (Stock unit) and 2 (Structure unit).
- Item cost type
- Indicate from where the component prices should be retrieved by ticking one of the following: Average cost, Standard cost, FIFO or Simulation cost.
- Work centre price
- Indicate from where the work centres prices should be retrieved during the calculation by ticking one of the following: Standard, Actual or Simulation.
- You access Product costing online, Overview.
- You access Product costing update selection.
Click OK.
This panel displays the calculated costs for the selected item (this level) and its sub-assemblies (lower levels). The overview also displays the total value (all levels) for each cost element. Note: What costs are displayed for the item is defined in the cost model that is used in the calculation. See About cost models for information about the set-up of cost models.
Click Save prod cost.
Note: If you are authorised to update sales prices you can complete the Upd base sales price and Base sales price fields.
For this task, click OK.
Result
The calculation is now saved in the Product costing enquiry file and the Standard cost field is updated in the Item file with the calculated cost value.
Exit the routine.