Understanding Product Costing in Mixed Manufacturing Environments
Few manufacturing companies use only one type of operating environment. Often, process manufacturing companies use discrete methodologies when performing packing and shipping activities. Companies that use discrete or job-shop manufacturing methods often adopt more efficient operations using rate-based, or batch processing methods. Any combination of operating methods is possible, depending on the industry and the product mix.
Companies that can use a combination of manufacturing methods must also consider how to account for costs that are incurred from those various methods. Each method has specific strategies for establishing and collecting cost information. In combination, certain adjustments or restrictions might be necessary so that costing information flows from the most basic of cost components through the rolled up or completely costed end products.
As the company refines its production processes and automates costing activities, you should create detailed definitions of the costing processes. Verify that the cost techniques support any manufacturing method that you use. The ultimate goal is to decrease the lead time that is required to maintain and monitor product costing information throughout the entire manufacturing process.
Depending on the environment in which you use the JD Edwards EnterpriseOne Product Costing system, whether it involves using batches, kits, processes, or configured items, or whether you use it in distribution, the system calculates product costs differently.