Effective Cost Management

Most of the major areas or departments within the manufacturing company contribute information to the product costing activities and, therefore, affect the overall accuracy of the manufacturing budget.

This table lists examples of departments within a typical company and the aspects of the JD Edwards EnterpriseOne Product Costing and JD Edwards EnterpriseOne Manufacturing Accounting systems that are affected by each department:

Department	Description
Design Engineering	The design engineering group is responsible for ensuring that: The bill of material is complete. The make-buy information is accurate. The engineering change orders (ECOs) have been taken into account.
Sales	The sales force contributes important information regarding target markets, as well as the latest trends in manufacturing. For effective cost management, the sales force must provide timely and reasonable forecasts.
Manufacturing Engineering	The manufacturing engineering group is responsible for identifying: Correct processes. Changes to existing processes. Manufacturing overhead. Accurate information about work centers.
Purchasing	The purchasing department must provide: Accurate supplier costs Accurate transportation costs
Manufacturing	Manufacturing operations provide vital information to the costing effort. For example, they must: Enter their data in a timely and accurate manner. Identify any discrepancies in the bills of material and routings.
Cost Accounting	The cost accounting staff must: Ensure that all items have costs. Identify general and administrative overhead. Produce timely variance reports (standard costs versus current costs).

Consider these issues as you define and manage manufacturing costs:

• When (and how often) you change costs.

• How you limit access.

• When the cost of a new item is reflected.

• How you account for labor rates and work center overhead.

You might also encounter these circumstances as you define costs:

• Not all costs are available before the initial cost rollup.

• You have used incorrect units of measure.

• The company reports labor hours and costs inaccurately.

• New products are not updated in a timely manner.

• Standards are updated too frequently.

• Items have been added to or deleted from the bill of material since the last cost update.

• Steps in the routing master have been changed since the last cost update.