Costing Basic Data

Different costing information is needed to be able to run the costing system properly. Some of the information is defined automatically when setting up the system or creating a new site, but you can also choose to define your own.

Calculation Basic Information

To calculate cost on an inventory part you have to define the cost set you want to use in your calculation. The cost set consists of cost templates, a manufacturing template and a purchasing template. Each cost template has one or several cost buckets assigned and each cost bucket is built up from cost elements. Below are more details about the different types of information you need to define before starting the cost calculation.

 



Diagram 1 - Calculation Basic Information

1 - Inventory Part (Cost Set)
2 - Template
3 - Bucket 1 - Machine Costs
4 - Bucket 2 - Material Costs
5 - Bucket 3 - Sales Overhead
6 - Cost Element

Cost Set

The cost set is defined per site. Each site gets default cost sets defined automatically when it is created. When working with cost sets, you can redefine a cost set, create a new cost set, and delete any cost set except cost set 1.

Characteristics for Cost Set 1

The following restrictions apply to cost set 1:

The above rules and restrictions only apply to cost set 1. All other cost sets and their descriptions may be altered. Cost set 1 holds the standard cost. The standard cost must be calculated in another cost set, since calculations in cost set 1 are not possible. You must copy the desired costs from calculations performed in another cost set via a special copy dialog. Copying cost information into cost set 1 updates the inventory value.

Predefined Cost Sets

When you create a new site, five different cost sets are defined automatically:

Value Description
1 Inventory value
2 Estimated material cost
3 Latest purchase price
4 Average purchase price
5 Planned purchase cost

The predefined cost set has a default manufacturing template and a default purchasing template.

Cost Set Default Manufacturing Template Default Purchasing Template
1 M-110 P-110
2 M-110 P-110
3 M-110 P-120
4 M-110 P-130

Cost Templates

The use of cost templates enables rapid system set up and ease of use. The templates are used to connect buckets holding costs to the inventory part that will eventually carry the costs.

Predefined Cost Templates

When a site is created, some cost templates are created automatically. These default cost templates have predefined cost buckets assigned to them.

Cost Template ID Description Assigned Cost Bucket
M-110 Manufacturing Cost Template 200, 201, 221, 300, 321, 322, 400, 421
P-110 Estimated Material Cost Template 110
P-120 Latest Purchase Price Template 120
P-130 Average Purchase Price Template 130
P-140 Purchase Cost Template 140, 160, 170
P-150 Inter-site Material Cost Template 510

The cost templates are connected to the different cost sets created when a new site is created.

Note: If you want to capture actual Material Overhead cost in the shop order flow for purchased parts which use the weighted average inventory valuation method or inventory parts with part cost level set to Cost Per Serial, you should use a cost bucket for which the cost element source ID is 500 (Total Cost).

Cost Buckets

The cost bucket contains the costs (cost elements) of any given part registered in the system.

Predefined Cost Buckets

When the system creates a site, some cost buckets are created automatically. These default cost buckets have predefined cost elements assigned to them.

Cost Template ID Description Assigned Cost Bucket
110 Estimated material cost 110
120 Latest purchase price 120
130 Average purchase price 130
140 Planned Purchase Price 140
160 Purchase Additional Cost Amount 160
170 Purch Charge on Supplier for Part 170
200 Labor cost 210, 220
201 Labor overhead cost 210
221 Labor overhead cost 221
250 Contract labor cost 250
300 Machine cost 310, 320
321 Machine overhead 1 cost 321
322 Machine overhead 2 cost 322
400 Subcontracting cost 410, 420
421 Subcontracting overhead cost 421
510 Inter-site Material Cost 510
150 DOP Purchased Material Cost 110. This cost bucket is used by the DOP Actual Cost Calculation. It should not be used for other purposes.

Cost Elements

A cost element corresponds to a cost generating item, such as a material cost, a work center cost, or a labor cost. Cost elements allow you to choose among a set of predefined cost elements connected to the system. You can also choose to enter your own cost element. A user defined cost element can be one of two kinds: a fixed cost element or a cost element based on a predefined cost element. Creating your own cost elements is the only way to create user defined overhead costs.

You should only use elements for creating overhead costs. Since it is possible to enter an element without an overhead type, elements can be ignored in the shop order process because only system generated elements can be used to capture non overhead costs, such as machine costs, labor costs, material costs, and subcontracting costs.

You can change the factor of any user-defined element except for the below mentioned:

Part-specific overhead trigger elements 501, 502, 141 and 601, and for material overheads using source element 501, for general overheads using source element 502, for delivery overheads using source element 141 and sales overheads using source element 601.

However, note that changing an element factor affects the system's calculation of every part cost using this element. In some cases, there could be thousands of parts connected to a very central element, such as machine cost or material cost.

The fixed cost element is a cost element serving as a fixed markup, while a cost element based on a predefined, system-generated cost element serves as an overhead element carrying a user defined percentage of the cost generated by the underlying cost element. For each cost element you define, you must define the overhead type.

Overhead Types

The overhead type tells the system when to use costs in the accounting system. All overhead types are system generated and correspond to a specific posting type in the system. Depending on the overhead type chosen, the overhead cost is attributed differently and is transferred to WIP (Work in Progress) at a different time, if the final carrier of cost is the basis of a shop order.

Overhead Type Corresponding Posting Type
Material Overhead M44
Delivery Overhead M57
Labor Overhead M58
Machine Overhead 1 M45
Machine Overhead 2 M46
General Overhead M59
Sales Overhead M190

Predefined Cost Elements

When the system is installed, some predefined cost elements are installed. These system-generated cost elements are already connected to costs and drivers of costs throughout the system.

Note: The cost element 500 is not visible in Cost Elements, but it can be chosen as a source from within the source element's List of Values. This element acts only as the basis for elements with the overhead types Material Overhead or General Overhead If you want to capture actual Material Overhead cost in the shop order flow for purchased parts which use the weighted average inventory valuation method or inventory parts with part cost level set to Cost Per Serial, you should use a cost bucket for which the cost element source ID is 500 (Total Cost).

 

Cost Element Description Source of Data
110 Estimated material cost Cost Set Estimated material cost entered for the cost set in Part Cost/ Part Cost Details or in Part Costs.
120 Latest purchase price Latest purchase price on inventory part.
130 Average purchase price Average purchase price on inventory part.
140 Planned Purchase Price Planned purchase price from the purchasing module.
141 Purchase Delivery Overhead Trigger Multiple Delivery Overhead Setup/Supplier, Supplier for Purchase Part, Purchase Part.
160 Purchase Additional Cost Amount Additional cost amount from the purchasing module.
170 Purch Charge on Supplier for Part Planned charges from supplier for Purchase Part.
210 Labor setup cost Labor class costs and Routing Operation
220 Labor runtime cost Labor class costs and Routing Operation
221 Labor overhead cost Labor class costs and Routing Operation
250 Contract Labor Cost Actual labor cost from shop floor reporting
310 Machine setup cost Work center costs and Routing Operation
320 Machine runtime cost Work center costs and Routing Operation
321 Machine overhead 1 Work center costs and Routing Operation
322 Machine Overhead 2 Work center costs and Routing Operation
410 Subcontracting work unit cost Routing Operation Costs
420 Subcontracting batch cost Routing Operation Costs
421 Subcontracting overhead Routing Operation Costs
500 Total cost Total accumulated cost
501 Material Overhead Trigger Part Cost/Part Specific Overheads and Part Specific Overheads
502 General Overhead Trigger Part Cost/Part Specific Overheads and Part Specific Overheads
510 Inter-site Material Cost Costing/Basic Data/Multi-Site Costing Rules
601 Sales Overhead Trigger Part Cost/ Part Specific Overheads and Part Specific Overheads