Working with Product Costing

This chapter provides an overview of Product Costing and discusses how to:

• Review bill of material information for costing.

• Review routing information for costing.

• Run the Costing Exceptions report.

• Create a Simulated Cost Rollup.

• Review and revise simulated cost components.

• Review costed bills of material.

• Review costed routings.

• Update frozen costs.

• Freeze work center rates.

• Review frozen cost components.

• Review the Cost Components report.

• Review the item ledger.

Understanding Product Costing

This section discusses:

• Cost reduction.

• Standard costing.

• Simulated versus frozen costs.

• Cost components.

Cost Reduction

To remain competitive in a changing business environment and to reduce the costs that are passed along to the consumer, companies must be aware of all aspects of their business and look for ways to refine operations to reduce lead times, expedite speed to market, and reduce the cost of operations. All of these processes help the company to be more flexible so that it can respond to changes in customer demands and to maintain or improve its market share.

To reduce costs that you incur as a part of conducting business, you must understand where costs are generated. For production industries, you must break down product costs into each contributing factor that influences the ultimate cost of the manufactured product. You should track not only the cost of the individual item, but also each additive feature or activity that adds cost to the end product or increases the value of the product.

Numerous activities or processes might add costs to the product. You should have processes and tools in place to identify each component of cost. You must also understand how those incurred costs might be passed along to customers.

As the company refines its production processes and automates costing activities, you should create detailed definitions of the costing processes. Ensure that the cost techniques support any manufacturing method that you use. Often, a company wants to decrease the lead time required to maintain and monitor product costing information throughout the entire manufacturing process. More accurate costing information enables you to identify wasteful costs, and to lower costs that must be passed along to the consumer or that are absorbed. The goal is to increase the company's revenue and improve profit margins.

Standard Costing

With standard costing, you estimate costs for each end item assembly and manufactured part on a level-by-level basis before production begins. These cost estimates are based on both past performance and analysis of future conditions.

Distinguishing components of net-added cost and components of total cost:

The net-added cost represents the cost to manufacture an item at a specified level in the bill of material. For manufactured parts, the cost includes labor, outside operations, and extra costs, but not materials (lower-level items). For purchased parts, the net-added cost includes the cost of materials. The total cost of an item represents the sum of the item's net-added cost and the total cost of all components.

By defining and monitoring standard product costs, you can measure the company's current manufacturing performance and compare it to the standard (target) costs. Product costing provides information about the monetary investments in the materials, work in process, and physical inventory. You can use this information to determine pricing on end-items and service components.

Simulated Versus Frozen Costs

Simulated costs represent hypothetical situations for a given cost method. You might want to calculate simulated costs because of changing factors in the business environment.

For example, you can use simulated rollups to:

• Simulate an increase in material costs.

• Simulate changes in labor rates.

• Develop strategies for pricing, contractual, or labor negotiation.

You can simulate and review cost change scenarios (rollups) as many times as needed before you finalize the changes.

Changes are finalized in the system when you perform a frozen cost update for a given cost method. A frozen update copies the simulated values and makes them the frozen costs, and updates the Item Cost table (F4105) with the total cost. These costs remain in effect until you update them with another frozen update.

Cost Components

Cost components are values in UDC table 30/CA that represent the individual costs that make up an item, such as costs for material, labor, overhead, and extras. The system automatically calculates material, labor, and overhead costs. Extra costs, such as electricity, are manually controlled.

Use cost components to maintain complete item costing information. You can use them to set up simulated cost scenarios to help plan for future cost changes, and to display the simulated or frozen net-added and total component costs for any item.

In addition, you can:

• Allow for extra costs that are related to the manufacturing of a product, such as costs for electricity, insurance, water, or warehouse space.

• Review specific calculations that determine cost amounts for any item.

• Maintain costs by branch for multifacility processing; multifacility processing allows for different costing values based on regional or business variations.

• Define additional cost factors to include in product costing calculations.

Reviewing Bill of Material Information for Costing

Review the bills of material to understand the data that affects material costs. Only items with a bill type of M are used to establish standard costs.

This section discusses how to review bill of material information for costing.

Form Used to Review Bill of Material Information for Costing

Reviewing Bill of Material Information for Costing

Access the Enter Bill of Material Information form.

See Also

Setting Up Bills of Material

Reviewing Routing Information for Costing

Review the routings to understand their input into the labor and overhead costs.

This section discusses how to review routing information for costing.

Form Used to Review Routing Information for Costing

Reviewing Routing Information for Costing

Access the Enter Routing Information form.

Work Center	Enter a work center number. Work centers are business units on the shop floor where routing steps take place. Work centers may include people or machines or both. Costs can be tracked at the work center level you have selected the Cost by Work Center option in the Manufacturing Constants.
Run Labor	Enter the standard hours of labor that you expect to incur in the normal production of this item. The run labor hours in the Routing Master table (F3003) are the total hours that it takes the specified crew size to complete the operation. The hours are multiplied by the crew size during shop floor release and product costing.
Run Machine	Enter the standard machine hours that you expect to incur in the normal production of this item.
Setup Labor	Enter the standard setup hours that you expect to incur in the normal completion of this item. This value is not affected by crew size and is divided by the accounting cost quantity to calculate the per unit setup cost.
Time Basis	Enter a UDC (30/TB) that indicates how machine or labor hours are expressed for a product. Time basis codes identify the time basis or rate to be used for machine or labor hours entered for every routing step. For example, 25 hours per 1,000 pieces or 15 hours per 10,000 pieces. You can maintain the time basis codes in Time Basis Code from the Product Data Management Setup menu (G3041). The system uses the values in the Description-2 field on the User Defined Codes form for costing and scheduling calculations. The description is what the code represents, but is not used in calculations.
Crew Size	Displays the crew size. The Crew Size field on the Work Order Routing form contains the value entered on the Work Center Revision form (P3006). You can override the value by changing this field on the Work Order Routing form. However, the Work Center Revision form will not reflect this change. The system multiplies the Run Labor value in the Routing Master table (F3003) by crew size or the number of people who work in the specified work center during costing to generate total labor amounts. If the Prime Load Code is L or B, the system uses the total labor hours for backscheduling. If the Prime Load Code is C or M, the system uses the total machine hours for backscheduling without modification by crew size.
Type Oper (type operation)	Enter a UDC (30/OT) that indicates the type of operation. Values are: A: Alternate routing. TT: Travel time. IT: Idle time. T: Text. For Product Costing, only operations with a blank type operation code are costed.
Yield % (yield percent)	Enter the planned output yield percent for a step. The Planned Yield Update program uses this value to update the cumulative percent in the routing and the operation scrap percent in the bill of material. Materials Requirements Planning (MRP) uses the step scrap percent and the existing component scrap percent to plan component demand.
Cum Yield % (cumulative yield percent)	Enter the cumulative planned output yield percent for a step. The system uses this value to adjust the operation step scrap percent for the components at that operation step. This enables the JD Edwards EnterpriseOne Requirements Planning system to use the operation step scrap percent along with the existing component scrap percent to plan component demand.

See Also

Entering Work Centers and Routing Instructions

Running the Costing Exceptions Report

This section provides an overview of the Costing Exceptions report and discusses how to:

• Create the Costing Exceptions report.

• Set processing options for Costing Exceptions (R30801).

Understanding the Costing Exceptions Report

Before you roll up simulated costs, run the Costing Exceptions report (R30801). This report lists error messages that identify any problems that are associated with an item. An example of a problem is an item without a routing.

The error messages are hard-coded in UDC table 30/EM. You cannot add or change these error messages. You can define the severity level for each error message to one that is appropriate for the company. For example, if having labor costs of 0 (zero) is an important exception in the company, you could assign that error message a high severity level. You can indicate in the processing options the minimum level of error messages that you want included in the report.

This table identifies the changeable, default severity setting for each of the hard-coded error messages:

You should correct the problems and run the Costing Exceptions report again before you create a simulated rollup.

Creating the Costing Exceptions Report

Select Product Costing Reports (G3023), Costing Exceptions.

Setting Processing Options for Costing Exceptions (R30801)

These processing options control default processing for the Costing Exceptions report.

Error Message

This processing option controls the error message display on the report.

Cost Method

These processing options control which cost method the system uses as a basis for determining costing errors.

Creating a Simulated Cost Rollup

This section provides an overview of the Simulated Cost Rollup, lists prerequisites, and discusses how to:

• Create a simulated rollup.

• Set processing options for Cost Simulation - Build Temp (R30812).

Understanding the Simulated Cost Rollup

Use the Cost Simulation - Build Temp program (R30812) to calculate costs based on hypothetical situations. The Frozen Standard Update report (R30825) displays the cost components by work center. After you run this report, you can review the results in the Cost Components program (P30026).

To retrieve a bill of material and routing, the program searches first for a bill for which the batch quantity matches the accounting cost quantity. When the program finds no such bill, it uses the zero batch bill. The bill of material must have bill type M (Standard Manufacturing Bill). Effective dates on components must be valid.

For the system to calculate B and C cost components, all of these conditions must be met:

• The routing must have routing type M (Standard Manufacturing Routing).

• A routing operation must have a work center with rates in the Work Center Master table (F30006) for the cost component to appear.

• The operation type code on the routing must indicate a normal operation (that is, the field for this code is blank).

• The effective dates on the routing must be valid.

  The default As Of date is the current date.

The cost simulation is affected by:

• Cumulative yield.

• Operation scrap.

• Master routings.

• Unit of measure conversions.

Cumulative Yield

Cumulative yield, which is defined on the routing, affects labor and machine hours in the rollup calculations. Enough hours must be expended to obtain 100 percent yield at the last operation. In a series of routings, the hours must be adjusted accordingly.

This example illustrates how costing of hours is affected by cumulative yield (Cumulative Yield = 85 percent (0.85)):

For each operation, the labor and machine hours are adjusted by dividing the hours by the cumulative yield. Setup hours are not affected.

Operation Scrap

Operation scrap, defined on the bill of material, affects material cost calculations in the rollup. Enough material must be at each operation in order to obtain 100 percent yield at the last operation. When material cost is calculated, the quantity of the components is adjusted accordingly.

This example illustrates the effect of operation scrap on costing:

• Parent = A

• Component = B

• Quantity per = 3

• Cost of B = 5.00

• Operation scrap = 8 percent

• Cost of B rolled into parent item A = 3 x 1.08 x 5 = 16.20

Master Routings

The Cost Simulation - Build Temp program uses the master routing for the item from the Routing Master table (F3003) if all of these items are true:

• The Master Routing field on the Manufacturing Constants form is set to Y for the branch.

• The parent item has a cross-reference item defined for master routing.

  (The cross-reference item must be defined with a cross-reference type of MR and the Address field must be blank.)

• An item routing has been defined for the cross-reference item.

Unit of Measure Conversions

The Cost Simulation - Build Temp program converts all units of measure to the primary unit of measure for the purpose of the rollup.

When one of the units of measure is a potent unit of measure, the conversion equation includes the standard potency value from branch/plant manufacturing data.

This example illustrates a conversion involving a potent unit of measure:

• Component = B

• Quantity per = 3

• Primary unit of measure = GA (physical gallons)

• Component unit of measure = GP (potent gallons)

• Standard potency = 50 percent

• Cost of B = 50.00 (from the Item Cost table, F4105)

• Cost rolled into parent item = [(3 / .5) x 50] = 300.00

Simulated Product Cost Tables

Simulated costs are generated using multiple tables in the JD Edwards EnterpriseOne system from Oracle. The Cost Simulation - Build Temp program (R30812) sums the costs of all the components in each level of the parent item's bill of material to arrive at a total cost for the parent item.

You can set the processing options in any of the cost simulation programs to specify the cost method that you want to use.

The Cost Simulation - Build Temp program (R30812) uses information from these tables to generate costs:

Prerequisites

Before you run the Cost Simulation - Build Temp program, the Costing Exceptions report should be run to identify if error messages exists that are associated to an item.

Creating a Simulated Rollup

Select Product Costing (G3014), Simulate Standard Rollup.

Setting Processing Options for Cost Simulation - Build Temp (R30812)

These processing options control default processing for the default processing for the Cost Simulation - Build Temp program.

Default

These processing options control the default as of date and cost method for running this batch program.

Processing

These processing options control how the batch program processes the data.

Print

This processing option controls which items appear on the Cost Simulation report.

Process Mfg

If you use process manufacturing, these processing options control how the system calculates the costs for co-/by-products.

Reviewing and Revising Simulated Cost Components

This section provides an overview of simulated cost components and discusses how to:

• Set processing options for Cost Components (P30026).

• Revise simulated cost components.

Understanding Simulated Cost Components

After you have created simulated costs, review costing information to determine the effects of the current rollup scenario. Revise the costing information, as necessary. When costs are correct, run the Frozen Standard Update program (R30835).

You review costing information and set up simulated cost scenarios to help plan for future cost changes. After running the Cost Simulation - Build Temp program (R30812), you can review the cost simulation report that displays the previous cost of the item, the simulated rolled up cost, and the variance between the two. After reviewing the simulated costs, you revise incorrect information and create simulated costs again to include the changes.

You can change only simulated costs. You can set a processing option if you want to manually maintain the routing cost components (B and C) and protect them from being overwritten.

You must delete costs at the bill of material level at which they occur. For example, you cannot delete costs for lower-level components by locating the parent item. Instead, locate the component item number and remove the costs for the component. The system does not make the corresponding cost change to the higher level components and the parent item until you run the Cost Simulation - Build Temp program. To delete outside processing costs (usually cost component Dx), delete the cost component from the routing. Then, delete the cost component and net added value on the Enter Cost Components form.

If you activate the Cost by Work Center option in the Manufacturing Constants program (P3009), you can define cost components by work center, as well. When you use this feature, the amounts for a cost component at multiple work centers in the Item Cost Component Detail table (F300261) must match the corresponding cost component amounts in the Item Cost Component Add-Ons table (F30026). You can use simulated rate and factor codes either at the work center or the cost component level, but not at both levels.

Forms Used to Review and Revise Simulated Cost Components

Setting Processing Options for Cost Components (P30026)

These processing options control default processing for the Cost Components program.

Process

These processing options control whether the system calculates costs from manual input or by running the Cost Simulation - Build Temp program (R30812).

Revising Simulated Cost Components

Access the Enter Cost Components form.

To review and revise simulated cost components:

1. Review these fields on the Enter Cost Components form:

   • Simulated

   • Frozen

   • Cost Ledger

     The item cost totals represent the total costs of all cost components as of the last cost simulation for simulated values, and as of the last frozen update for frozen values. Simulated and frozen values are from the Item Cost Component Add-Ons table (F30026).

     If the program finds a discrepancy between the Frozen and Cost Ledger fields, it highlights both fields.

   • Cost Method

2. Review or revise these fields in the detail area:

   • Cost Type

   • Simulated Net Added

     This field is used to calculate cost during the simulation process.

   • Simulated Total

     For the designated cost method, this field is used to calculate the cost of all the lower levels during the simulation process. There is also a frozen view.

3. Select the record, and then select Cost Calc from the Row menu to access the detail calculations for the net-added value of a routing cost component (B or C).

4. Select an operation and click Select on the Work With Work Center Cost form.

   The Work With Cost Calculation form displays realtime costs. These values are calculated from work center data, work center rates, and manufacturing constants. They might be different from those on the Enter Cost Components form, if you have changed the item's routing, work center rates, or manufacturing constants since you last ran the Simulate Standard Rollup program (R30812) or Frozen Standard Update (R30835).

See Understanding Calculations in Cost Rollup.

Reviewing Costed Bills of Material

This section provides an overview of the Costed Bill of Material program and discusses how to:

• Set processing options for Costed Bill of Material (P30206).

• Review costed bills of material.

Understanding the Costed Bill of Material Program

To assist you in budgeting resources and planning for future cost of items, use the Costed Bill of Material program (P30206) to review costs for both parent items and components.

The program displays summarized costs for the direct components, net-added costs, and total costs for the parent item from the Item Cost Component Add-Ons table (F30026). For each component, the program displays costs that it calculates based on the as of date from the bill of material and the required quantity multiplied by the F30026 value. The program uses the as of date to ignore obsolete component lines in the bill of material.

You can review all costs of manufacturing a parent item, including assembly, subassembly, and component costs in either simulated or frozen views.

The manufacturing costs are divided into five user-defined categories for precise costing calculations:

• Purchase

• Labor

• Machine

• Overhead

• Extras

You can review this information:

• Net-added cost for the parent from the F30026 table at the top of the form.

• Cost breakdown for all next-level components.

• Total costs of the parent item from the F30026 table.

• Total of all costs for the parent item.

The program can accumulate purchase costs for up to 500 components on each bill of material. Components beyond 500 are not included in the costing process.

Note. If you update costs on the bill of material by changing quantities required, components, or simulated or frozen costs of the component, the changes are reflected in the costed bill inquiry. As a result, the values for the parent F30026 might differ from those that appear on the Work with Costed Bill form if you have changed the bill of material since you last ran the rollup program. Routing costs also come from the F30026 table. Any changes to the routing or manufacturing constants since the last cost rollup are reflected in the costed routing.

The totals are either totals from the F30026 table or columnar totals calculated in real time, depending on how you set the processing option for calculating totals.

Forms Used to Review Costed Bills of Material

Setting Processing Options for Costed Bill of Material (P30206)

These processing options control default processing for the Costed Bill of Material program.

Display

These processing options control the information that appears on the form, such as whether standard or calculated totals appear and whether fixed costs are based on the requested or the accounting cost quantity.

Reviewing Costed Bills of Material

Access the Work With Costed Bill form.

To review a costed bill of material:

Note. To toggle between frozen and simulated cost, select Frozen or Simulated from the View menu.

1. Complete these fields and select Find on the Work With Costed Bill form:

   • Branch/Plant

   • Parent Item

2. Review these fields:

   • Req. Quantity (required quantity)

     Enter the number of parent items that you want to process. The system calculates lower level values in quantity per the number of parent items requested. For instance, if it takes 3 components per a parent item, then with a requested quantity of 10, the system would plan and cost for 30 components.

   • As of Date

     Enter the date used for effectivity checking. Enter a specific date to display documents (orders, bills of material, routings, as applicable) that are effective on or after that date. The current system date is the default, but you can enter any future or past date.

   • Cost Method

   • Batch Quantity

   • UOM (unit of measure)

   • Skip to BOM Line # (skip to bill of material line number)

     Enter a number that specifies how the system displays the sequence of components on a single-level bill of material. The number initially indicates the sequence in which a component was added to the bill of material. You can modify this number to change the sequence in which the components appear.

   • 2nd Item Number

   • Purchase

     Displays the work amount field for the manufacturing system. It is cost bucket 1 as defined for UDC 30/CB (Cost Buckets). A processing option controls whether the system adds cost buckets 1 and 2 (at the top of the form) into the grand total of all costs for the parent item at the bottom of the form.

   • Labor

   • Machine

   • Overhead

   • Extras

   • Total

3. Select a record in the detail area and select Details from the Row menu.

4. Review these fields on the Costed Bill Detail form:

   • Quantity Per

     Displays the number of units that the system applies to the transaction.

   • Effective From

     Displays a date that indicates when a component part goes into effect on a bill of material, when a routing step goes into effect as a sequence on the routing for an item, or when a rate schedule is in effect. The default is the current system date. You can enter future effective dates so that the system plans for upcoming changes. Items that are no longer effective in the future can still be recorded and recognized in the JD Edwards EnterpriseOne Product Costing system, JD Edwards EnterpriseOne Shop Floor Management system, and Oracle's JD Edwards EnterpriseOne Capacity Planning system. The JD Edwards EnterpriseOne Requirements Planning system determines valid components by effectivity dates, not by the bill of material revision level. Some forms display data based on the effectivity dates you enter.

   • Effective Thru (effective through)

     Displays a date that indicates when a component part is no longer in effect on a bill of material, when a routing step is no longer in effect as a sequence on the routing for an item, or when a rate schedule is no longer active. The default is defined in the Data Dictionary. You can enter future effective dates so that the system plans for upcoming changes. Items that are no longer effective in the future can still be recorded and recognized in the JD Edwards EnterpriseOne Product Costing, JD Edwards EnterpriseOne Shop Floor Management, and JD Edwards EnterpriseOne Capacity Planning systems. The JD Edwards EnterpriseOne Requirements Planning system determines valid components by effectivity dates, not by the bill of material revision level. Some forms display data based on the effectivity dates you enter.

   • Operation Scrap Percent

     Displays a value the system uses to increase or decrease the amount of materials to account for loss within the operation. The system updates this value on Enter/Change Bill of Material when you run the Planned Yield Update program. The system calculates this value by compounding the yield percentages from the last operation to the first operation. Use a processing option in Enter/Change Routing to enable the system to calculate the component scrap percent.

   • Percent of Scrap

     Displays the percentage of unusable component material that is created during the manufacture of a particular parent item. During Distribution Requirements Planning (DRP), Master Production Schedule (MPS), and Material Requirements Planning (MRP) generation, the system increases gross requirements for the component item to compensate for the loss. Enter percentages as whole numbers, for example, 5 percent as 5.0.

     Note. Inventory shrink and scrap are compounded to calculate the total loss in the manufacture of a particular item. Accurate shrink and scrap factors support more accurate planning calculations.

   • Feature Cost Percent

5. Click Cancel.

6. Select a component and select Next from the Row menu to access the costed bill information for the components on the Work With Costed Bill form.

7. Select Frozen or Simulated from the View menu to toggle between frozen and simulated costs.

8. Select Columns from the Form menu to review cost buckets.

Reviewing Costed Routings

This section provides an overview of the Costed Routing Inquiry program and discusses how to:

• Set processing options for Costed Routing Inquiry (P30208).

• Review costed routings.

• Review costed routing details.

Understanding the Costed Routing Inquiry Program

Use the Costed Routing Inquiry program (P30208) to review the summarized costs of an item for each operation in the routing.

This information can help you to effectively manage production costs, for example, you can:

• Review the work center that is responsible for an operation.

• Determine whether a work center performs multiple operations.

• Display simulated or frozen costs for labor values for cost methods.

• Calculate the totals for all costs by cost categories.

This program calculates the cost associated with an operation by multiplying the routing hours by the work center rates for those operations with valid effective dates.

The program can accumulate purchase costs for up to 500 components on each bill of material. Components beyond 500 are not included in the costing process.

Note. If you update the routing for an item, the changes are reflected in the Costed Routing/Process Inquiry program. The Enter Cost Components form displays the costs that the system calculates when you run the Simulate Standard Rollup program. As a result, the values on the Enter Cost Components form might differ from those on the Work with Costed Routing/Process Inquiry form if you have changed the routing, work center rates, or manufacturing constants since you last ran the rollup program.

When all of these statements are true, the Costed Routing/Process Inquiry program uses the master routing for the item from the Routing Master table (F3003):

• The Master Routings option on the Manufacturing Constants Revisions form (W3009B) is selected for the branch.

• The parent item has a cross-reference item defined for master routing.

  The cross-reference item must be defined with a cross-reference type of MR and the Address field must be blank.

• An item routing has been defined for the cross-reference item.

Forms Used to Review Costed Routings

Setting Processing Options for Costed Routing Inquiry (P30208)

These processing options control default processing for the Costed Routing Inquiry program.

Defaults

These processing options control the cost methods that the system uses for subcontracted and purchased items.

Display

This processing option controls the amount of cost information displayed on the Work With Costed Routing/Process form.

Process

This processing option controls whether the system includes cost buckets 1 and 2 in the total.

Reviewing Costed Routings

Access the Work With Costed Routing/Process form.

Note. To toggle between frozen and simulated costs, select Frozen or Simulated from the View menu.

Reviewing Costed Routing Details

Access the Costed Routing Details form.

Review these fields:

• Category

• Cost Type

• Description

• Cost

Updating Frozen Costs

This section provides an overview of frozen cost update and discusses how to:

• Run the frozen update program.

• Set processing options for Item Cost Component - Frozen Update (R30835).

Understanding Frozen Cost Update

After you perform simulated rollups to determine the effect of any changes, you can update the frozen costs with simulated values by running the Item Cost Component - Frozen Update program (R30835). Most companies run this program at the beginning of a new fiscal year to create their manufacturing costs for the next fiscal period.

You can set a processing option to run a work-in-process revaluation automatically when you update frozen costs. In this case, the WIP Revaluation program (R30837) runs for all items that are processed through the Item Cost Component - Frozen Update program. If any item is flagged for cost change in the Item Cost table (F4105), any open work order that contains this item is revalued, along with any work orders to which the parent item was issued. This logic is carried through to the highest-level parent item.

Note. This program uses the costs generated by the most recent version of the Cost Simulation - Build Temp program (R30812). If you have changed information since the last simulated cost rollup, those changes will not be reflected by the frozen update.

The frozen cost update uses the costs that were generated by the Cost Simulation - Build Temp program to perform these actions:

• Update unit costs in the Item Cost table for the cost method selected.

• Update frozen costs in the Item Cost Component Add-Ons table (F30026) for the cost method selected.

• Update labor and overhead rates in the Work Center Rates table (F30008).

• Print report totals by company, branch/plant, and GL category code.

• For on-hand balances, create an Item Balance (IB) record in the Item Ledger table (F4111) if the cost method selected matches the sales and inventory cost method for an item.

• For on-hand balances, write journal entries to the Account Ledger table (F0911) in either detail or summary format, creating batch type NC (Frozen Cost Update).

  The system creates an item ledger record when the cost method selected for update is the sales and inventory cost method. The item ledger record indicates a change in inventory value for the updated items. The number of item ledger records written depends on the cost level of the item, which is defined in the Item Master table (F4101). For example, items at cost level 2 have an item ledger record for each branch/plant at which they are defined because costs can differ by branch/plant.

The program creates journal entries in either detail or summary format in amounts that match the item ledger records. Thus, the program maintains integrity between the Item Ledger table and the Account Ledger table (F0911). Use the Item Ledger/Account Integrity report (R41543) to verify this integrity.

These steps comprise the process flow for updating frozen costs:

• The program creates a journal entry only if an item ledger record has been written.

• An item ledger record is written only if an item cost ledger record has been updated.

• An item cost ledger record is updated only if a cost component record has been updated.

The program accesses these AAIs to obtain the object account:

This list identifies information about detail and summary journal entries:

The program produces this output:

Running the Frozen Update Program

Select Product Costing (G3014), Frozen Update.

Setting Processing Options for Item Cost Component - Frozen Update (R30835)

These processing options control default processing for the Item Cost Component - Frozen Update program.

Default

This processing option controls the default value for the cost method.

Processing

These processing options control processing criteria.

Process Mfg

If you use process manufacturing, this processing option controls whether the system updates the costs for co-/by-products.

G/L

These processing options controls the GL dates and how the system creates journal entries for the General Ledger.

Versions

This processing option controls which version of this program the system uses when the program is called from the Item Cost Component - Frozen Update program.

Print

This processing option controls how much information is included in the printed report.

Freezing Work Center Rates

This section provides an overview of the Freeze Work Center Rates program and discusses how to:

• Freezing work center rates.

• Set processing options for Freeze Work Center Rates (R30860).

Understanding the Freeze Work Center Rates Program

You can use the Freeze Work Center Rates program (R30860) to update frozen work center rates. You run this program when any of the work center rates have changed. You can perform this task using the Frozen Standard Update program (R30835); however, for actual costing, you do not need to simulate costs and perform a rollup. Running the Freeze Work Center Rates program ensures that work centers are updated with changed costs in an actual costing environment.

In addition, the Freeze Work Center Rates program enables you to update frozen costs for selected work centers, as opposed to updating all work center rates in the system.

Freezing Work Center Rates

Select Product Costing (G3014), Freeze Work Center Rates.

Setting Processing Options for Freeze Work Center Rates (R30860)

These processing options control default processing for the Freeze Work Center Rates program.

Processing

This processing option controls whether the system freezes work center rates.

Print

This processing option controls the information included in the report.

Reviewing Frozen Cost Components

This section provides an overview of costing information review and discusses how to review frozen cost components.

Understanding Costing Information Review

After you run the Frozen Update program (R30835) to revalue the inventory, you should review the updated costing information. These costs stay in effect until you run the update again. You can review frozen costs in the Cost Components program (P30026). You can also create a report based on the information in this program. The Item Ledger Inquiry program (P4111) provides information about the transactions that have affected the item that you are reviewing, including cost changes. You can review costs by viewing the bill of material and compare frozen standard costs to the unit costs in the Item Cost table (F4105).

Form Used to Review Frozen Cost Components

Reviewing Frozen Cost Components

Access the Work With Cost Components form.

To review frozen cost components:

1. Complete these fields and select Find on the Work With Cost Components form:

   • Item Number

   • Branch/Plant

   • Cost Method

2. Review the Frozen field.

3. Select Frozen or Simulated from the View menu to toggle between frozen and simulated costs.

4. Click Close.

   Note. The frozen total is the accumulated standard cost rolled up from the lower levels.

Reviewing the Cost Components Report

This section provides an overview of the Cost Components Report and discusses how to:

• Run the Cost Components Report.

• Set processing options for Cost Components Report (R30026P).

Understanding the Cost Components Report

Use the Cost Components report (R30026P) to review the component costs and total cost for each item. This information comes from the Enter/Change Cost Components program (P30026).

You can customize this report to meet specific needs. For example, you can:

• Process the report using any valid cost method.

• Review the cost type and description by item number.

• Identify items.

• Define the exact information that appears on the report from data selection options.

  For example, you can select specific items and decide whether to include factors or rates for add-on and extra costs.

• Print the report for a single item, several items, or all items.

You can include any of the cost components that you define for an item in the cost bucket that you specify.

Running the Cost Components Report

Select Product Costing Reports (G3023), Cost Components.

Setting Processing Options for Cost Components Report (R30026P)

These processing options control default processing for the Cost Components report.

Defaults

This processing option controls whether the report prints simulated or frozen costs.

Reviewing the Item Ledger

This section provides an overview of item ledger review and discusses how to review item ledger information.

Understanding Item Ledger Review

Use the Item Ledger Inquiry (The CARDEX) program (P4111) to view item balance (IB) transactions for an item.

The Frozen Update program (R30835) transfers IB transactions to the item ledger if all of these statements are true:

• The frozen cost changes in the Item Cost table (F4105) for a given cost method.

• That cost method is used as the sales and inventory cost method.

• A quantity on-hand exists.

See Also

Setting Processing Options for Item Ledger Inquiry (CARDEX) (P4111)

Form Used to Review the Item Ledger

Reviewing Item Ledger Information

Access the Work With Item Ledger form.

To review the item ledger:

1. Complete the Item Number field.

2. Type IB in the Document Type field and click Find.

3. Review these fields:

   • Transaction Date

     Displays the date that an order was entered into the system. This date determines which effective level the system uses for inventory pricing.

   • Unit Cost

4. Click Close.

   Note. The value in the Quantity field represents the available quantity, which might consist of the on-hand balance minus commitments, reservations, and backorders. You enter this value in the Branch/Plant Constants program (P41001).