Example of Single Level Cost Rollup

This example extends the previous example and illustrates how the unit cost of a make item is calculated by the Roll up Costs process when single level cost rollup is selected in the cost scenario.

Scenario

Your organization is now manufacturing an item RS-ABCDE that has a structure as shown in the image here. To make this item, you need the item RS-ABCD and the material RS-E. You've published the cost for RS-ABCD (as calculated in the earlier example) and it's available for cost planning.

The start date of work definition is same as defined earlier.

Cost Scenario

Create a cost scenario with the rollup scope as Selected Items and also select the Single-level Cost Rollup option. You want to use the already published costs for RS-ABCD and, therefore, you must select the Single-level Cost Rollup option. If you don't select this option, the Roll up Costs process will recalculate the costs for RS-AB, RS-CD, and RS-ABCD.

Define the standard costs, resource rates, and overhead rates as mentioned in the previous examples. Additionally, define this standard cost for the new material RS-E.

Item	Cost Element	Cost Element Type	Expense Pool	Unit Cost
RS-E	CML-Material	Material		1.00

Analysis

After you define the cost scenario and the corresponding standard costs, resource rates, overhead rates, run the Roll up Costs process for the cost scenario.

Rolled Up Costs

RS-ABCDE is made by using the item RS-ABCD and the material RS-E. You need welding torches and the work must be inspected by an inspector. The item cost calculation for RS-ABCDE is shown in this table.

Number	Operation Sequence	Item	Item Description	Unit Cost	Quantity	Extended Cost
Main (#V1)		RS-ABCDE	RS-ABCDE	54.876	1	54.876
	10	Frame Assembly				49.80
		RS-ABCD	RS-ABCD	38.80	1	38.80
		RS-E	RS-E	1.00	1	1.00
		Welding Torch		5.00	2	10.00
	20	Inspection				4.00
		Inspector		4.00	1	4.00
		Plant Overhead				1.076