Costing Sheet - Dynamics AX User Group on production control.

Hands-On Lab: Standard Costing

Objectives

The objectives are:

·         Describe how cost groups are used in Microsoft Dynamics AX 2012.

·         Create and use cost groups with products, resources, and routes.

·         Create cost categories and assign them to resources.

·         Create a costing version for planned costs and standard costs.

·         Describe the difference between planned costs and standard costs.

·         Describe what the costing sheet is used for.

·         Set up a costing sheet.

·         Define indirect costs in the costing sheet.

Introduction

The objective of this Hand-on Lab (HOL) is to explore, at your own pace, the principles and set up required for standard costing in Microsoft Dynamics^® AX 2012. This HOL highlights the following topics.

·         Setting up and working with cost groups

·         Setting up and working with cost categories

·         Working with costing versions to set up standard costs

·         Working with cost calculations

·         Creating and using costing sheets

Lab time: 45 minutes

Note that hands-on labs for the Inventory Costing and Valuation in Microsoft Dynamics AX 2012 contain dependencies, which means that some data that you set up or create in one lab can be used in other labs. Therefore, it is recommended that you perform all six labs on a single virtual machine (VM) in a sequential order. You can download the VM with Microsoft Dynamics AX 2012 using the following link:

https://mbs.microsoft.com/partnersource/deployment/methodology/vpc/ax2012demotoolsmaterials.htm?printpage=false&sid=va2ynauztj1yuvhufnfo34in&stext=ax%202012%20virtual%20machine

Use the AX2012-A VM with the following credentials:

Account: Administrator
Password: pass@word1 (mailto:pass@word1)

Prerequisite Knowledge

To successfully complete this HOL, you will need to have an understanding of how to use the principles and mechanisms from cost management in Microsoft Dynamics AX 2012. Additionally, you must have a general understanding of the basic inventory accounting principles and the underlying inventory costing methods, and valuation principles.

It is also recommended that you complete the “Introduction to Inventory Costing Hands-on Lab” and the “Setup Hands-on Lab” before beginning this lab.

Scenario: Cost Groups

Cost groups are classifications of cost contributed by resources. The cost group types determine the nature of resources, which can be classified through the cost group.

·         Direct material: A cost group designated as direct material can be
assigned to items.

·         Direct manufacturing: Restricted to cost categories for
manufacturing operational resources.

·         Direct outsourcing: Restricted to service type products.

·         Indirect: An indirect cost group can be assigned to indirect costs for
surcharges or rates.

·         Undefined: A cost group designated as undefined can be assigned to
items, cost categories, or indirect costs.

Ken, the Controller, has decided that items costs and variances for subcontracted items should be categorized separately from other raw material and manufactured items. So, Ken has created new main accounts that will be used for posting these types of items. Now Ken must work with Vince, the Operations Manager, to create a new cost group, assign them to the products and resources, and configure the system to post variances by cost groups.

Exercise 1: Configure the System for Cost Breakdowns

You can choose to maintain a cost breakdown for each cost group for standard cost. You can use the cost breakdown feature to view the cost composition of items held at standard cost across production levels, for planned, estimated, and actual costs. Product costs, production costs, inventories, work in process (WIP), cost of goods sold and variances to standard cost can all be analyzed and rolled up in their original cost groups, when cost breakdown is turned on.

To turn on cost breakdown, follow these steps.

1.       Open Inventory and warehouse management > Setup > Inventory and warehouse management parameters.

2.       Click the Bills of materials tab.

3.       Select Sub ledger in the Cost breakdown field.

4.       Select Per cost group in the Variances to standard field.

5.       Close the form.

Figure 3.1 Inventory and Warehouse Management Parameters Form - Bill of Materials Tab

TIP: You must turn on the Bill of materials > Allow cost breakdown activation configuration key in the License configuration form to use this feature.

Exercise 2: Create a Cost Group

To create a new cost group, follow these steps.

1.       Open Inventory and warehouse management > Setup > Costing > Cost groups.

2.       Click New to create a new record.

3.       Type "SContract" in the Cost group field.

4.       Type "Variable Subcontract Costs" in the Name field.

5.       Select Direct outsourcing in the Cost group type field.

6.       Select Variable cost in the Behavior field.

Figure 3.2 Cost Groups Form

Exercise 3: Configure Postings by Cost Groups

Next, Ken must specify the main accounts to be used for standard cost variances.

To create a new main account that will be used for subcontracting variances, follow these steps.

1.       Open General ledger > Common > Main accounts.

2.       Click Main account in the New group of the Action Pane.

3.       Type "510305" in the Main account field.

4.       Type "Subcontracting Variances" in the Name field.

5.       Select the Do not allow manual entry check box. 

6.       Close the form.

To specify posting accounts by cost groups, follow these steps.

1.       Open Inventory and warehouse management > Setup > Costing > Cost groups.

2.       Select the SContract cost group that you created in Exercise 2: Create a Cost Group, and then click Posting. 

3.       In the Posting form, click Purchase price variance on the left pane.

4.       Click Add in the grid on the right pane.

5.       In the Main account field, select 510305.

6.       Click Production lot size variance on the left pane, and then repeat steps 4 and 5.

7.       Click Production price variance on the left pane, and then repeat steps 4 and 5.

8.       Click Production quantity variance on the left pane, and then repeat steps 4 and 5.

9.       Click Production substitution variance on the left pane, and then repeat steps 4 and 5.

10.   Close the form.

Exercise 4: Link a Cost Group to a Released Product

Next, Vince must link the new cost group to the service items that are used for subcontracting.

To link a cost group to a product, follow these steps.

1.       Open Product information management > Common > Released products.

2.       Select 11010 - Installation Service from the list.

3.       Click Edit in the Maintain group of the Action Pane.

4.       Click the Manage costs FastTab.

5.       Select SContract in the Cost group field.

6.       Close the form.

Scenario: Cost Categories

Cost categories apply to manufacturing environments that use routings. Cost categories are assigned to operations resources and routing operations to define hourly costs and segment cost contributions in a manufactured item’s calculated costs. That is, the cost groups that are assigned to cost categories classify manufacturing cost contributions by operation resources and the type of activity, such as setup and run time. The specificity of cost group assignment provides the foundation for calculating manufacturing overheads based on routing information.

TIP: Cost categories have several synonyms within manufacturing environments, such as labor rate codes or machine rate codes.

About Cost Categories

Each cost category has its associated cost records and an assigned cost group. Different cost categories are needed to support different production purposes.

·         Assign different hourly costs by operations resource, such as different costs for various types of labor skills, machines, or manufacturing cells.

·         Assign different hourly costs for the setup time or run time that is associated with a routing operation.

·         Assign operations resource costs on the basis of output quantity rather than hourly costs, such as the piece rates for paying labor.

·         Provide cost group segmentation of cost contributions to a manufactured item’s calculated cost, such as segmentation of labor and machine costs.

·         Provide the cost group basis for overhead calculation formulas, such as labor-related and machine-related overheads or overheads that are related to setup and run time.

Exercise 1: Create a Cost Category

You can set up and link cost categories to the operations of any selected route, and therefore, define the hourly cost and processing times of the specified route.

To create a new cost category, follow these steps.

1.       Open Production control > Setup > Routes > Shared categories.

2.       Click New to create a new record.

3.       Type “SContract” in the Category ID field.

4.       Type "Subcontracting” in the Category name field.

5.       Select the Can be used in Production check box, and then close the form.

6.       Open Production control > Setup > Routes > Cost categories.

7.       Click New to create a new line.

8.       Select SContract in the Category ID field.

9.       Click the Production FastTab, and then in the Cost group field, select Service.

10.   Click the Ledger - resources FastTab.

11.   In the WIP account field, select the receipt account that will be debited for operations resource consumption (such as 150200). This account is used for WIP when you consume operations (in a route card journal) on a production order.

12.   In the WIP issue field, select the issue account that will be credited for operations resource consumption (such as 600500). This account is the offset to the WIP account field.

13.   In the Resource issues field, select the issue account that will be credited for operations resource absorption when you end a production order (such as 600500).

14.   In the Resource issues, offset account field, select the offset account to be debited for resource issues when you end a production order (such as 510240). 

TIP: Steps 6 through 9 are only required when the Ledger posting field in the Production control parameters form is set to Item and category.

15.   Close the form.

Figure 3.3 Cost Categories Form

NOTE: It is recommended that the accounts specified on a cost category are set up to prevent manual entries. You can do this by selecting the Do no allow manual entries on the Main accounts form.

Exercise 2: Set Up Prices for a Cost Category

The cost record for a cost category can be site-specific or company-wide. The cost record will be site-specific if you assign a site to it. Otherwise, a blank value means that the cost record will apply to all sites within the company. Costs may differ between sites, for example, so that the cost records must be defined as site-specific.

To configure a cost price for the category, follow these steps.

1.       Open Production control > Setup > Routes > Cost categories.

2.       Select the SContract category that you created earlier.

3.       Click Price.

4.       In the Version field, select Standard.

5.       Select Site 1.

6.       Type "19.99" in the Price field.

7.       Save the record, and then click Activate.

8.       Close the form.

Figure 3.4 Cost category price form

Exercise 3: Link a Cost Category to a Resource Group

A cost category can be assigned to the setup time, process time, and the quantity for a routing operation. When costs or cost group segmentation differ between setup and process time, for example, different cost categories should be defined and assigned to them. The selective usage of cost categories for setup time, process time, and quantity is determined by the route group that is assigned to an operation.

To assign cost categories to a resource group, follow these steps.

1.       Open Organization administration > Common > Resources > Resource groups.

2.       Select the resource group from the list that you want to assign cost categories to.

3.       Click the Operation FastTab.

4.       In the Setup category field, select the cost category that will be used for setup operations.

5.       In the Run time category field, select the cost category that will be used for run time operations.

6.       In the Quantity category field, select the cost category that will be used for the quantity of items produced.

7.       Close the form.

TIP: On the Ledger FastTab you can specify the main accounts that will be used to post the consumption. These fields are used when the Ledger posting field in the Production control parameters form is set to Item and resource.

Exercise 4: Override Cost Categories

You can override the cost categories on specific resources or operations. This might be required if you have specific resources or operations that you want to calculate and cost differently for operational or business purposes.

To override the cost categories on a resource, follow these steps.

1.       Open Organization administration > Common > Resources > Resources.

2.       Select the resource that you want to update.

3.       Click the Operations FastTab.

4.       You can change or select the Route group to pull in default values from the route group.

5.       Select the Setup category, Run time category, and Quantity category.

6.       You can also override the main accounts on the Ledger FastTab.

To override the cost categories on an operation relation, follow these steps.

1.       Open Production control > Setup > Routes > Operations.

2.       Select the operations that you want from the list.

3.       Click Relations.

4.       In the Operation relation form, select the item with the operation that you want to update.

5.       Click the Setup tab.

6.       Select the category that you want in the Setup, Run, and Quantity fields.

Scenario: Costing Versions

A costing version can serve one or more purposes based on the data that is contained within the costing version. The primary purpose of a costing version is to contain cost records about items, cost categories, and indirect cost calculation formulas. A costing version can contain a set of standard cost records or a set of planned cost records that are based on the costing type that is assigned to the costing version.

·         Standard costs: A standard cost is a politically determined cost of a product that can also include operation costs and rates for indirect costs calculations. The standard cost is used on all purchase and production orders when they are created and processed.

·         Planned costs: A costing version can contain a set of planned cost records about items and manufacturing processes. A costing version with planned costs is often used to support cost calculation simulations, such as simulating the effect of cost changes to purchased materials or manufacturing processes on the calculated costs of manufactured items. The item cost records for planned costs can also be used to support an actual cost inventory model by providing the initial values for item costs, including the calculation of planned costs for manufactured items.

Exercise 1: Create a Costing Versions

The Costing versions form is used to view and maintain cost data in an unblocked costing version. A costing type indicates whether a costing version will contain standard costs or planned costs, which then constrains how cost data will be entered and calculated. Data maintenance includes having to perform the following tasks.

1.       Open Inventory and warehouse management > Setup > Costing > Costing versions.

2.       Click New.

3.       In the Costing type field, select Standard cost.

4.       Type "2012Std" in the Version field.

5.       Type "2012 Standard Costs" in the Name field.

6.       Set the Block activation field to No.

7.       Click the Recording tab.

8.       Select the Cost price check box. 

9.       Close the Costing version setup form.

After you create a new costing version, you can enter the costs for the version. The basic tasks you can complete include the following.

1.       Enter purchase price records for purchased items and costs for transferred items.

2.       Enter cost records for cost categories that are associated with routing operations.

3.       Calculate cost records for purchased and manufactured items.

4.       Change the status of cost records from pending to active.

5.       Copy item cost records to a costing version.

The detailed steps for completing these tasks are included in the following exercises.

Exercise 2: Block Costing Versions

Two blocking policies for a costing version determine whether pending costs can be maintained and whether the pending cost can be activated. You can use the blocking policies to control data maintenance, and then to control activation for cost records within a costing version.

Ken, the Controller, wants to run a calculation for manufactured items to know how the changing purchase prices of raw materials is affecting the cost of manufactured items. So, Ken decided to block the new costing version to prevent the calculated prices from being activated.

To block a costing version for activation, follow these steps.

1.       Open Inventory and warehouse management > Setup > Costing > Costing versions.

2.       Select the costing version that you want to block.  For example, select Std_2007.

3.       Optionally, set the Block field to No. so that, if necessary, new costs can be created for the costing version.

4.       Optionally, set the Block activation to Yes. This will prevent the pending prices in the selected version from being activated.

5.       Close the form.

Costing Version Strategies: One versus Two

Updates to standard cost data can be managed by using two different approaches―the one-version approach and the two-version approach.

·         The one-version approach uses a single costing version that contains all cost records. These records include the original costs and all cost updates.

·         The two-version approach uses one version that contains records of the original costs and a second version that contains records of all cost updates. A primary advantage of the two-version approach is the clear delineation and tracking of cost updates in a separate costing version, without affecting the original costing version. The two-version approach can be used to identify multiple incremental updates, where each incremental update has a separate costing version that contains the incremental cost records.

When the two-version approach is used, blocking policies for the original costing version should be set up to prevent updates. Identical blocking policies should be set up for the additional costing version, except for the specified from-date and the selective use of blocking policies to allow for updates. The specified from-date should be updated with each batch of changes to reflect the scheduled activation date.

Exercise 3: Set Up and Activate Standard Cost

After a costing version is defined, you can set up a standard cost for a product.

To define a standard cost for a product, follow these steps.

1.       Open Product information management > Common > Released products.

2.       Click Product in the New group of the Action Pane.

3.       Fill in the Product number, Item number, and fields in the Reference groups field group, and then click OK.

4.       From the Released products list page, click the Manage costs tab in the Action Pane.

5.       Click the Item price button in the Set up group of the Action Pane.

6.       Click New to create a new record.

7.       In the Pending prices tab, select 2012Std in the Version field.

8.       Select 1 in the Site field.

9.       Type "67.89" in the Price field.

10.   Press Ctrl+S to save the price.

11.   Click Activate.

12.   Click the Active prices tab to view the new price.

13.   Close the Item price form.

TIP: Because this is a new item, the activation of the standard cost has no affect on the inventory value. If the item has on-hand quantities, the system revalues the inventory at the new standard cost and posts a transaction using the Inventory cost revaluation account specified for the combination of item, inventory dimensions, and cost groups in the Posting form on the Standard costs tab.

Exercise 4: Copy Costs in a Costing Version

You can copy item prices from one costing version to another. The copy process provides two basic options―to copy the item cost records from a specified costing version―or to copy the active item cost records that are defined in one or more costing versions.

Item cost records can be selectively copied and changed to populate the copy-to costing version. For example, you can change the cost records based on a factor or amount, change the site to create cost records for another site, or change the from-date to create cost records that apply to a future time period. The copied cost records have a pending status, and costs for manufactured items must be recalculated after you copy the cost records.

To copy costing versions, follow these steps.

1.       Open Inventory and warehouse management > Setup > Costing > Costing versions.

2.       Select the version that you want to copy from and then click Copy > Copy item prices.

3.       Select an option to copy from a specific version or from active prices.

4.       Select the version to copy the price to in the Copy to Version field.

5.       Optionally, select the Change date field to update the copied records with a new date.

a.       In the Unit field, select to add Days, Months, or Years.

b.       In the Change field, specify the number of Days, Months, or Years to add.

6.       Optionally, select the Change site check box, and then specify the new site for the copied records in the Change field.

7.       Optionally, use the Change in price field group to update the prices by a factor or an amount.

8.       Optionally, use the Change in charges field group to update the charges by a factor or an amount.

9.       Optionally, use the Select button to filter the records to be copied.

10.   When you are ready, click OK. The selected prices will be copied.

TIP: Similar steps can be used to copy indirect cost and cost category prices.

Exercise 5: Calculate Standard Costs for Manufactured Items

Manufactured items have a bill of materials (BOM) that includes information about the raw materials and semi-finished goods that comprise the finished good. You can run a calculation for manufactured items and for the cost of a purchased item. This is useful when you have indirect costs that will be added to the purchase price of a product. Additionally, the indirect costs can include a route that includes information about the operations (or tasks) to complete the production of the manufactured item. To determine the total cost of a manufactured item, you must run a calculation.

To run a calculation from the costing version, follow these steps.

1.       Open Inventory and warehouse management > Setup > Costing > Costing versions.

2.       In the Costing version setup form, select the record for the
Standard Cost Costing Version and then click Calculation.

3.       In the Calculation for a costing version form, click the Site arrow
and select “1.”

4.       Click Select.

5.       Click the Criteria column and then type “1101, 1102”.

6.       Click OK in the BOMCalc query form.

7.       Click OK in the Calculation for a costing version form.

8.       In the Costing version setup form, click Price > Item price.

9.       Select the record for item 1101 and then click Summary.
 

Figure 3.5 Summary calculation inquiry form

Notice that the line for the sales price for HESMat cost group is based on
the cost price plus the 50 percent profit margin markup. The calculation for Cost group HESMat, Level 1 is as follows: 554.03* 50% = 277.015. Therefore, + 554.03+277.015= 831.045, which is the sales price for each unit.

NOTE: There are several ways to run a calculation. This exercise only examines one method for running a calculation. For more information about calculations groups and calculations refer to the Bill of Materials in Microsoft Dynamics AX 2012.

Use Costing Versions for Sales and Purchase Prices

A costing version can also contain data about item sales prices or purchase prices for BOM calculation purposes.

·         Item sales prices for BOM calculation purposes − A BOM calculation can calculate a sales price for manufactured items, and a BOM calculation can generate an associated sales price record within the costing version.

·         Item purchase prices for BOM calculation purposes − A BOM calculation with planned costs can be based on item purchase price records within the costing version, rather than item cost records. The item purchase price records must be manually entered.

Scenario: Costing Sheet

Setting up the costing sheet involves two objectives. The first objective is to define the structure that will display the cost of goods manufactured and the cost of goods purchased information about a manufactured item or purchased items. The second objective is to define the basis for calculating indirect costs. The costing sheet setup builds on the cost group feature that will display information and the indirect cost calculation formulas.

Example of a Costing Sheet

Because the costing sheet set up is dynamic, you can structure the sheet any way you choose. You can add header and total nodes to the sheet to create the effect of grouping. The Costing Sheet Example figure illustrates a costing sheet that includes sections for costs of goods purchased, and cost of goods manufactured.

Figure 3.6 Costing Sheet Example

The starting point for using the tree structure is labeled the root node. This node cannot be deleted or modified. All other nodes in the tree are created by right-clicking on the parent node that you want to add the child node to and selecting Create. You can drag cost groups from the Cost group FastTab into the tree structure to help quickly build the layout.

When you add an indirect cost node, you must select the type of indirect cost that will be created, and then configure the Calculation and Posting (selection of main accounts for posting the indirect costs) tabs.

Exercise 1: Create Cost Groups

To create new cost groups that will be used in the costing sheet, follow these steps.

1.       Click the Company arrow in the breadcrumb bar, and then select CEC.

2.       Open Inventory and warehouse management > Setup > Costing > Cost groups.

3.       Click New to create a new record.

4.       Type "MAT" in the Cost group field.

5.       Type "Material Costs" in the Name field.

6.       Select Direct materials in the Cost group type field.

7.       Select Fixed cost in the Behavior field.

8.       Click New to create a new record.

9.       Type "LAB" in the Cost group field.

10.   Type "Labor Costs" in the Name field.

11.   Select Direct manufacturing in the Cost group type field.

12.   Select Fixed cost in the Behavior field.

13.   Click New to create a new record.

14.   Type "IND" in the Cost group field.

15.   Type "Indirect Costs" in the Name field.

16.   Select Indirect in the Cost group type field.

17.   Select Fixed cost in the Behavior field.

18.   Close the form.

To unblock the costing version, follow these steps.

1.       Open Inventory and warehouse management > Setup > Costing > Costing versions.

2.       Select the CUR1 costing version.

3.       Set the Block field to No.

4.       Close the form.

Exercise 2: Define the First Node Under the Root

To create the first node in the costing sheet, follow these steps.

1.       Click the Company arrow in the  breadcrumb bar, and then select CEC.

2.       Open Inventory and warehouse management > Setup > Costing > Costing sheets.

3.       Right-click the Root node in the Costing sheet pane, and then select Create.

4.       In the Edit FastTab, select Cost of goods manufactured in the Type field.

5.       Select the Header and Total check boxes.

Figure 3.7 Costing sheet setup form

Exercise 3: Create a Child Node for Material

To create a child node for materials, follow these steps.

1.       In the Costing sheet setup form, right-click the Cost of goods manufactured node that you created, and then click Create.

2.       On the Create new node dialog box, select Total in the Select node type field, and then click OK.

3.       Type "Material Cost" in the Code field.

4.       Type "Total Material Cost" in the Description field.

5.       Select the Total check box.

6.       Click the Cost groups FastTab.

7.       Click and drag the cost groups for materials from the Cost groups grid to the Material Cost - Total Material Cost node on the tree.

Figure 3.8 Costing Sheet Setup Form

Exercise 4: Create a Child Node for Labor

To create a child node for labor, follow these steps.

1.       In the Costing sheet setup form, right-click the Cost of goods manufactured node that you created, and then click Create.

2.       On the Create new node dialog box, select Total in the Select node type field, and then click OK.

3.       Type "Labor Cost" in the Code field.

4.       Type "Total Labor Cost" in the Description field.

5.       Select the Total check box.

6.       Click the Cost groups FastTab.

7.       Click and drag the cost groups for labor from the Cost groups grid to the Labor Cost - Total Labor Cost node on the tree.

Figure 3.9 Costing Sheet Setup Form

Exercise 5: Create a Child Node for Overhead

To create a child node for indirect costs, follow these steps.

1.       In the Costing sheet setup form, right-click the Cost of goods manufactured node that you created, and then click Create.

2.       On the Create new node dialog box, select Total in the Select node type field, and then click OK.

3.       Type "Indirect Cost” in the Code field.

4.       Type "Total Indirect Cost" in the Description field.

5.       Select the Total check box.

6.       Click the Cost groups FastTab.

7.       Click and drag the cost groups for indirect cost from the Cost groups grid to the Indirect Cost - Total Indirect Cost node on the tree.

Figure 3.10 Costing Sheet Setup Form

Exercise 6: Define the Calculation of Indirect Costs

To define the cost calculations for indirect costs, follow these steps.

1.       Right-click the COGM - IND - Indirect Costs node in the tree.

2.       Select Create.

3.       On the Create new node dialog box, select Surcharge in the Select node type field, and then click OK.

4.       Type "MAT-OVH" in the Code field.

5.       Type "Material Overheads" in the Description field.

6.       In the Subtype field, select Total.

7.       Click the Calculation tab.

8.       In the Code field, select Material Cost.

9.       In the Surcharge grid on the bottom of the form, select CUR1 in the Version field.

10.   Select Site S1, and type "2.5" in the Percent field.

11.   Click the Posting tab.

12.   Type "600100" in the Estimated indirect absorption and Indirect absorption fields.

13.   Type "150000" in the Estimated indirect absorption offset and Indirect absorption offset fields.

14.   Right-click the COGM - IND - Indirect Costs node in the tree.

15.   Select Create.

16.   On the Create new node dialog box, select Rate in the Select node type field, and then click OK.

17.   Type "LAB-OVH" in the Code field.

18.   Type "Labor Overheads" in the Description field.

19.   In the Subtype field, select Process.

20.   Click the Calculation tab.

21.   In the Code field, select Labor Cost.

22.   In the Rate grid on the bottom of the form, select CUR1 in the Version field.

23.   Select Site S1, and type "15.00" in the Amount field.

24.   Repeat steps 11 through 13.

25.   Click Validate to make sure that there are no errors, and then close the Infolog window.

26.   Click Save, and then close the Infolog window.

27.   Close the Costing sheet setup form.

Figure 3.11 Costing Sheet Setup Form

NOTE: You can add the indirect cost prices to the Surcharge or Rate grid at the bottom of the form. You can also use the Costing version form to add the indirect costs.

Summary

Cost groups are classifications of cost contributed by resources. The cost group types determine the nature of resources, which can be classified as Direct material, Direct manufacturing, Direct outsourcing, Indirect, or Undefined.

You can use cost categories to support the following.

·         Assign different hourly costs by operations resource, setup time, run time, or on the basis of output quantity

·         Provide cost group segmentation of cost contributions to a manufactured item’s calculated cost

·         Provide the cost group basis for overhead calculation formulas

Costing versions are used to setup standard costs and planned costs. You can define, item costs, sales prices, purchase prices, cost group prices, and indirect costs. You can also run calculations for manufactured items.

The two objectives of costing sheet setup include defining the format, and defining the basis for calculating indirect costs. The costing sheet gives you full control of the costing breakdown, and allows you to define the calculations for indirect costs.