Understanding Product Costing for Kit Items

When you use kit items with options, the Cost Simulation program (R30812) calculates the average cost of the kit parent item, based on the feature cost percentage. The system can calculate the average cost for a kit parent item if:

• The kit parent item has a stocking type of M (manufactured).

• You have entered the feature cost percentage of the components on the bill of material.

The Cost Simulation program multiplies the feature cost percentage with the cost of the option from the Item Cost table (F4105) to determine the option's share of the average cost of the kit parent item. The program then adds monetary amounts for each option to determine the average cost for the kit parent item.

This diagram illustrates product costing for a kit item.