Roll Up Costs
After you're ready with your cost estimates for materials, direct labor, and indirect labor, you can run the Roll up Costs process to calculate the standard costs of your make items.
The process uses your cost estimates and manufacturing work definitions, calculates overheads incurred as part of the manufacturing processes, and generates the unit cost of the make items. The Roll up Costs process first calculates the total cost as the fixed cost operations plus the variable costs (the unit resource cost multiplied by the quantity consumed). Next, it calculates the per-unit cost as the total cost divided by the scaled quantity.
The cost roll-up experience is designed to facilitate an interactive cost estimation process. You can review errors reported, review the work definitions being used for cost roll-up, change your work definition selection criteria, and modify component purchase prices and the resource rate as many times as required.
When calculating the cost of make items, the process doesn't include the costs consumed in optional operations for manufacturing work definitions. This is true for operations that are executed conditionally, for example, a rework step based on inspection results in the previous operation. Similarly, output items yielded from optional operations in process manufacturing are also not included in the cost rollup.
After you run the process, you can review the costs on the View Rolled-up Costs page. The page lists the calculated unit cost of the make items, along with the costs of the individual components, resource rates, and overhead rates. You can also review additional details like the work definition name, process name, operations, and other output items yielded, in the case of process manufacturing.
ORA_CST_REBUILD_ROLLEDUP_COSTS, then you must
run the Restore Rolled-up Costs process for a cost scenario after
running the Roll up Costs process to view the costs in the View Rolled-up
Costs page.The cost of a make item is rolled up only if the respective costs and rates are set in the cost scenario. You can review all the exceptions encountered by the process on the View Scenario Exceptions page. In case of exceptions, to generate the costs of make items, take the necessary corrective actions to resolve the errors and re-run the Roll up Costs process.
Cost Rollup for Process Manufacturing
Standard cost rollup supports process manufacturing work definitions with multiple outputs, where the production method requires ways to manage variability that's inherent in materials and processes. This is useful if you require a hybrid of discrete and process manufacturing capabilities. You can specify the costing batch size to determine the standard cost of production batches and allocate costs based on a fixed cost or a percentage of the total cost, for the primary product, co-products, and by-products. The Roll up Costs process calculates the costs of output items with active work definitions, based on the cost allocation defined on the work definition operations. When output items are setup with fixed cost allocation, the system expects you to enter the costs of these items manually using the Standard Costs page or bulk interfaces. The entered costs are used to process product completion transactions.
Phantom Items in Work Orders
If a subassembly in a work order has the supply type as Phantom, then you must ensure that it has an active item structure as of the scenario effective date. For subassemblies with the supply type as Phantom in the work definition of a higher assembly, the Roll up Costs process will follow this in the order listed:
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Check whether a work definition exists for the phantom item and use that to roll up the cost.
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If a work definition doesn’t exist for the phantom item, then the process would use the item structure of the phantom item to roll up the cost.
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If neither a work definition exists nor an item structure for the phantom item, then the process will log an error.
Cost Rollup for Configured Items
For configured items, you can run the Roll up Costs process as and when the business needs, that's to say you can run the process on-demand, allowing you to calculate and publish the latest costs for manufactured and procured items. You can also calculate the costs of manufactured configured items before the transactions occur to plan for the costs. That's to say, you can plan the costs for manufactured configured items without a work order.
Additionally, if you've set the rollup scope to Unprocessed Purchase Orders and Work Orders, you can schedule the Roll up Costs process for configured items. This ensures that whenever a purchase order for a procured configured item is approved or a work order for a manufactured configured item is issued, the process rolls up the costs of that item for the new purchase order or work order, using the effective component costs, resource rates, and overhead rates.
Supply Chain Cost Rollup
After you run the Roll up Costs process, you can validate the product costs using the View Rolled-up Costs page. On this page, you can also verify the sourcing rules that were used to calculate the costs. Each sourcing rule node would have the cost breakdown to validate the rolled-up costs.
When multiple sourcing rules (rank = 1) are defined:
Standard cost of product = (User entered buy cost * Buy sourcing rule allocation) + (Rolled-up cost from work definition * Make sourcing rule allocation) + (Transfer cost * Transfer sourcing rule allocation)
You can analyze these costs using the Costing - Supply Chain Cost Rollup Real Time subject area in OTBI. You can create personalized analysis reports to verify the rolled-up costs of manufactured items. You can also design the report layout and include information relevant to your business. Additionally, you can also use the Supply Chain Rollup Costed BOM Report to analyze the rolled-up costs for your manufactured items. You can save this report locally and make necessary changes to include information as per your business needs.