Understanding Product Costing for Batch Manufacturing

Bills of material and routings can specify a batch quantity for products that are normally manufactured in specific batch sizes, such as chemicals, food, or petroleum.

To obtain a correct rollup when you use a batch quantity, the accounting cost quantity, the bill of material batch size, and the routing batch size must match, because the system rolls up:

• Labor and overhead costs only when the accounting cost quantity matches the routing batch size.

• Material costs only when the accounting cost quantity matches the bill of material batch size.

This table illustrates possible scenarios:

Accounting Cost Quantity	Bill Batch Size	Routing Batch Size	Rollup
10,000	10,000	10,000	Complete
5,000	10,000	10,000	None
10,000	5,000	10,000	Labor and Overhead Only
10,000	10,000	5,000	Material Only

If the Cost Simulation program (R30812) does not find a bill of material for which the batch quantity matches the accounting cost quantity, it uses the zero batch bill.

Note: Most cost amounts that appear on the Work with Costed Bill and Enter Cost Components forms are expressed by unit of measure, not by batch quantity. Setup costs are expressed by batch quantity.

See also:

• "Entering Item Master Information" in the JD Edwards EnterpriseOne Applications Inventory Management Implementation Guide.

• "Entering Branch, Plant Information" in the JD Edwards EnterpriseOne Applications Inventory Management Implementation Guide.

• "Setting Up Bills of Material" in the JD Edwards EnterpriseOne Applications Product Data Management Implementation Guide.

• "Creating Routing Instructions" in the JD Edwards EnterpriseOne Applications Product Data Management Implementation Guide.