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.

Note: If you have set the profile value to No for the profile option code 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.

Note: The Roll up Costs process isn't applicable for cost scenarios created using periodic average cost enabled cost books. After you define standard costs and resource rates for such a cost scenario, you run the Update Standard Costs process to publish the cost scenario.

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.