Understanding the Manufacturing Standard Cost Foundation

Before you calculate the cost of purchased components or make items, define the basic codes and tables that PeopleSoft Cost Management uses to build and categorize an item's cost; including, the labor, machine, subcontracting, and overhead rates. The system enables you to create multiple scenarios for standard costing by using cost types and versions.

This diagram illustrates the elements that are used to define the costing structure. The cost type and cost element are used to build the costing conversion rates and the costing conversion overhead rates along with the conversion code or the overhead conversion code. The cost version is used in combination with the cost type to define the costing conversion rates:

You can define how the system calculates the cost of purchased components by using the cost type page for the end item.

You can add additional costs to a manufactured item by using the Additional Item Costs page. These costs are applied after all labor, machine, material, and overhead costs are added.