Manufactured Item Costs

For the manufactured items, the costs are calculated by the Item cost Rollup function.

The panel Manufacturing costs (Item maintenance window) presents a summary table of the different types of cost.

The Item cost window displays two groups of three columns and a final column, called Variances, that is equal to the difference between the Total column from the right-hand side group and the Total column from the left-hand side group.

Each group of columns corresponds to a rollup calculation. In this way it is possible to compare two different cost calculations corresponding to different options.

In each group, the left-hand column Lower levels Costs displays the costs of the parts and components used to produce the item. The middle column Level costs represents the costs which come from manufacturing operations (applied to the parts and components) involved in the item production. It is worth noting that the lowest level costs include the cost of all the items starting at the lowest level of the BOM, i.e. the purchased items.

For each column, there are seven cost types:

Material cost:	This is the cost of the purchased materials. The value of these materials is estimated according to the method selected in the Cost rollup window.
Direct Labor cost:	This is the cost of the labor corresponding to the manufacturing routing operations. According to the options chosen in the cost rollup window, either the budget routings or the manufacturing routings are used in the calculations. The rates used to calculate these costs are either the budget rates or the rates defined in the cost centers.
Shop Direct costs:	These are the total direct workshop costs, calculated with the machine operation times. Again, these times are defined either in the budget routings or in the manufacturing routings. The rates applied to the machine times are either the budget rates or the rates defined in the cost centers.
Depreciation:	This is either the economic depreciation or the fiscal depreciation, according to the selected option in the Cost rollup window. These costs are calculated from the machine times, defined either in the budget routings or in the manufacturing routings. The rates are either the rates of budget depreciation or the depreciation rates defined in the cost centers.
Sub-contracting:	These are the costs of all the subcontracting operations. These costs are defined in the routings of the parent item and of its components.
Shop Indirect Cost:	This indirect cost is given the product in accordance to the number of machine hours necessary to manufacture it. This cost is used in the computation of the routing budgets or of different simulations of the cost of the costs centers.
Labor Indirect Cost:	This indirect cost is given the product in accordance to the number of labor hours necessary to manufacture it.

If we choose the corresponding options in the Cost Rollup window:

• the material costs can be multiplied by the purchasing overhead rate (budget or simulated),

• the depreciation and the fixed costs of the workshop can be multiplied by the plant overhead rate on machine costs and by the company overhead rate on machine costs,

• the labor costs can be multiplied by the plant overhead rate on labor and by the company overhead rate on labor costs.

The elements of the costs that are taken into account in the different columns (standard cost, cost of the previous calculation and cost of the last calculation) can be displayed by moving the mouse over the relevant field.

The manufactured item cost list can be printed by selecting Manufactured item cost from the Items and bill of materials section in the Reports window.