Calculating Standard Costs Using Cost Rollup Process

Use the Cost Versions page (CE_VERSION) to create different versions for a cost type to maintain a history of the different costs calculated for each cost type.

You can base these cost versions on different sets of assumptions, such as different effective dates or different budgets.

Navigation:

Cost Accounting > Item Costs > Define Rates and Costs > Cost Versions

This example illustrates the fields and controls on the Cost Versions page. You can find definitions for the fields and controls later on this page.

Use this page to define the different cost versions for a cost type. You can create unlimited cost versions for any cost type. By using different versions for a cost type, you can maintain a history of the different costs calculated for each cost type. You can base these cost versions on different sets of assumptions, such as different effective dates or different budgets.

Use the Cost Groups page (CM_COSTGROUP) to cost groups (also known as standard cost groups) enable you to group together a set of items for cost rollup and update, comparing costs and reporting inventory value.

Navigation:

Set Up Financials/Supply Chain > Product Related > Cost Accounting > Standard Cost Groups > Cost Groups

This example illustrates the fields and controls on the Standard Cost Groups page. You can find definitions for the fields and controls later on this page.

Standard cost groups enable you to group together a set of items for cost roll up and update, comparing costs and reporting inventory value. Add items to the cost group by entering the standard cost group on the item's Define Business Unit Item - General: Common page. Then, enter a standard cost group on the Cost Rollup page or the Cost Update/Revalue page instead of defining a range of item IDs.

Use the Forecasted Purchase Costs page (CE_FCST) to use negotiated prices for the items as the basis for the standard costs.

Navigation:

Cost Accounting > Item Costs > Define Rates and Costs > Forecasted Purchase Costs > Forecasted Purchase Cost

This example illustrates the fields and controls on the Forecasted Purchase Cost page. You can find definitions for the fields and controls later on this page.

Use the Forecasted Purchase Costs page to use a negotiated price as the material cost of the item in the Cost Rollup process. This enables you to use forecasted prices as a basis for the cost. The amount that you entered should be the material cost of the item only, exclusive of any freight, duty, landed costs, or procurement expenses. The cost element that you selected must have a cost category of Material assigned on the Cost Elements page.

Use the Additional Item Costs page (CE_ITEMEXP) to add other costs to the cost rollup of the items.

Examples of additional costs are landed costs such as, duty, freight, inspection, procurement expenses, and material handling.

Navigation:

Cost Accounting > Item Costs > Define Rates and Costs > Additional Item Costs > Additional Costs by Item

This example illustrates the fields and controls on the Additional Item Costs page. You can find definitions for the fields and controls later on this page.

Landed costs and other miscellaneous costs can be added into the standard cost of an item by using the Additional Item Costs page. You define these additional costs (one cost at a time) for each cost type or cost version combination.

When you use this page to add landed cost components to an item, you can track and analyze the total landed cost for that item. You can set up consigned items as landed cost items; if you do, the system transacts all accrued landed cost charges when the consigned item is consumed. No variances is computed for landed costs applied using this page. See the topic, "Structuring Landed Costs" for further information.

See Understanding Landed Costs.

The Exp Sequence No (expense sequence number) determines the order in which the system applies costs; it is especially critical when it applies the rate to the total cost. For a purchased item, the total cost base includes material and any additional cost previously applied to that point.

Define how the system calculates the additional cost. Application Method values include:

The Transaction Group defines the point at which you apply the additional costs into inventory. Select Stocking to include these costs in the standard cost calculations.

Enter a cost element for each additional cost. The cost element that you entered must have a cost category of Landed or Other entered on the Cost Elements page.

To calculate the standard cost of an item, use the Cost Rollup (CE_COST_ROLLUP) component.

Use the Cost Rollup page (CE_ROLLUP_REQ) to run this process to calculate the standard cost for the items.

Navigation:

Cost Accounting > Item Costs > Update Costs > Cost Rollup > Cost Rollup

This example illustrates the fields and controls on the Cost Rollup page. You can find definitions for the fields and controls later on this page.

Use the Cost Rollup page to perform a cost rollup for a single item, a range of items, or a group of items within a business unit, cost type, or cost version combination.