Background: Standard Cost Rollup

Use the Standard Cost Rollup (MCR) program to update the standard cost of items and update the general ledger if you have inventory interfaced to GL (see Overview: Interfacing Inventory to GL) and Road Map for more information.

This topic has these subtopics:

Cost Rollup

Costs are rolled up starting with low level code 1 (typically purchased components) until all low level codes have been rolled. The accumulated cost (standard cost) is the sum of the incremental costs of the current item and the accumulated costs, for each cost component, based on the item's bill of material. This sequence allows each level to be correctly costed.

If an item’s status indicates that it should be excluded from the cost roll, the item is skipped during the cost roll process and the item's costs remain unchanged, effectively "freezing" its standard cost at the last rolled cost.

If you input a range or list of items or select the option to only roll up zero cost items, the cost roll only updates the items that are specifically selected. For example, if you create a new finished good item that has subassemblies and new purchased items, you need to include all of them in the range or list.

Cost inquiries and reports use standard unit cost to provide a comparison with actual cost. The action of this program depends on the item type and the branch type:

The cost rollup process is dependent on the type of branch and on whether you make or buy the item:

You control when you want to recalculate standard costs for items. Some companies wish to maintain a standard cost for an entire year. In this case, for any new items added during the year, you would input the incremental material costs and select the option to only roll up zero cost items. However, if you copy existing items to create new items, system options (maintained in System Options Maintenance (XM) - Inventory Control Options) determine how item costs are copied.

If Copy item costs in enterprise item copy? is selected, the new item may not have a zero cost and would therefore not be included in a zero cost items only rollup.

You will likely want to select Copy item costs in the branch item copy? so, at least for some branches, branch records are assigned the manufacturing branch cost as they are created. If there are branches that you want to maintain their own costs (i.e., separate from the manufacturing branch costs), you can exclude them by leaving Upd costs in branch copy? blank in Branch Maintenance). If costs are not copied to the new branch record, they will be zero (unless costs are rolled up for the new branch specifically).

Multiple Batches

You can create more than one batch, each of which has different items and options. For example, you may specify batches that contain:

• Specific item numbers by entering a range or creating a list of items. However, the same item cannot be in more than one batch.

• Zero cost items only.

Default Record

You can enter new batches faster and more accurately if you set up a default record. For example, if you use the same labor, overhead, machine, and setup rates for all of your roll ups, create a default record with these rates. When you enter a new batch, the rate fields will already be populated by the program.

To create a default record, enter the program for which you want to set up an enterprise default record. Enter * in the field in which you would usually add a new record.

Work File Saved

If you click Cancel in response to the prompt Register is complete, proceed with update?, the program saves the work file and then displays the name of the file. The program writes the file using the file format of CRUWORK Material Cost Roll Up Work File; use the Data Dictionary Inquiry (DFQ) program to view the file variables.

Calculate Labor and Overhead

If you select the Calculate labor and overhead? option, Standard Cost Rollup calculates:

• Labor, labor overhead, and outside service costs from the parent item's current routing

• Material and material overhead costs from the parent and component records in the Item Cost Maintenance (ICM) program

If you do not select the Calculate labor and overhead? option, Standard Cost Rollup uses the incremental labor, overhead, and outside service costs from the item's record in the Item Cost Maintenance (ICM) program.

Preview Register

The Standard Cost Rollup Register, the register includes this information:

• Batch number

• Item number

• Branch

• Quantity on hand

• Stocking unit of measure

• Cost before roll up for material, labor, overhead, outside service, and total

• Item description

• Cost after roll up for material, labor, overhead, outside service, and total

• Unit cost variance: Old cost - New cost

• Old value: Old cost x Quantity on hand

• New value: New cost x Quantity on hand

• Inventory valuation variance: Old inventory value - New inventory value

• ****Message followed by:

• • Routing sequence level

  • Operation sequence number

  • Operation code

  • Operation type

  • Message text; for example, No overhead applied, Default machine rate used, and Make item .. no routing data available

Grand totals:

• Cost before roll up for material, labor, overhead, outside service, and total

• Cost after roll up for material, labor, overhead, outside service, and total

• Variance for material, labor, overhead, outside service, and total

• Number of items rolled up

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