Item Costing

Item costing requires certain associations and settings most of which apply to a perpetual costing method: Standard or

Average or FIFO or LIFO. You perform various activities in the perpetual costing methods. These include  viewing, inquiring,

purging, and error resubmission activities.

Define/View item cost information

To define or view item cost information, you must first select an item / cost type association. Item costs are always

associated with a cost type.

Item Cost form is used to define costs for buy items or enter additional costs for assemblies with costs generated from the

cost rollup.

1. If you share costs, you can define costs only in the cost master organization.

2. When you define an item, the system creates a cost record according to the costing method, the Frozen or

Average cost type. You can modify the Frozen cost type if no inventory transactions have occurred, enabling you

to directly set the frozen standard cost for the item. If inventory transactions have occurred, you must define a cost

in a cost type other than Frozen and perform a cost update to load a frozen cost for the item.

3. You cannot use the Item Costs window to edit average costs.

4. For Bills of Material users, you can use the costs in any cost type for the costed bill of material explosion reports to

examine other cost scenarios.

1. To define item costs Navigate to the Item Costs window. Choose the New button from either the Item Costs Summary

folder window or from the Item Costs Details window.

Or

Navigate to the Item Costs window.Enter the newly created item and Choose the Find button. Cost of value zero is attached

to the new item

2. Navigate to the Item Costs Details window. Do this by choosing the New or Open buttons from the Item Costs Summary

folder window.

Turn Inventory Asset on to indicate that for this cost type the item is an asset and has a cost. Turn Inventory

Asset off to indicate that for this cost type the item is an inventory expense item and cannot have a cost.

Indicate whether costs are based on a rollup of the item's bill of material and routing. This determines if the

structure of the item is exploded during the cost rollup process. Turn this off if the assembly for which you do not

want to change the cost. Generally, assemblies (make items) have this control turned on, and buy items have this

control turned off. You can freeze the cost of an assembly (for example, for an obsolete item) for the current cost

type by turning this off after performing a cost rollup. Future cost rollups do not change the cost for this item. The

default is the value of the MPS/MRP Planning make or buy attribute from the template used to define the item

default.

Enter the costing lot size for the item. Use this to determine the unit cost of subelements with a basis type of Lot.

The costing lot size is separate from the planning lead time lot size. When you define an item cost for the Frozen

cost type, the default is either the standard lot size, or 1, if the standard lot size is blank.

Enter the manufacturing shrinkage rate. The cost rollup uses the value you enter here to determine the

incremental component requirements due to the assembly shrinkage of the current item. You cannot enter

shrinkage for items that do not base costs on a rollup of the item's bill of material and routing(buy items). Detailed

cost information is displayed for reference.

3. Click on Costs to view or enter the cost information

Select the cost type as frozen and Click on costs Enter the cost element, sub-element, basis and rate

Basis : Enter a percentage rate or a fixed amount, as appropriate for the basis.

 

The basis factor is the amount or quantity the rate/amount is multiplied by to calculate the unit cost of the subelement. The

basis factor for subelements with a basis type of Item is always 1. The basis factor for subelements with a basis type

of Lot is the ratio of 1 over the item's standard lot size. The basis factor for subelements with a basis type of Activity is the

ratio of activity occurrences over number of items. The basis factor for subelements with a basis type of Resource Units

is the number of resource units earned on an assembly routing. The basis factor for subelements with a basis type

of Resource Value is the extended value of the resource earned on an assembly routing. The basis factor for subelements

with a basis type of Total Value is the total cost of the item, less any this level material overhead.

If you are defining an item cost in a cost type other than Frozen, then the existing cost information is copied from the default

cost type to the current cost type. You can use this cost information or modify it to create a new cost for the current cost

type. If you use the average cost method, you can create budget or simulation costs here. You cannot edit average costs

from this window.

4. View item costs using multiple inquiries. From each inquiry, you can drill down into cost details.