# Cost Rollup Process (COST.P1)

Updated: 1/18/2022, 5:31:44 PM
Created: 1/18/2022, 5:31:44 PM
Last Updated By: dependabot[bot]
Read Time: 4 minute(s)

Form Details
Form Details

Purpose
The COST.P1 procedure rolls up the costs for each part number in the parts master file. Material, labor and overhead costs are calculated and loaded as part of the process. The user may specify if the current or book costs are to be rolled up and if all or only specified part numbers are to be processed. Normally only current costs are rolled up and then rolled over via the COST.P2 procedure. The ability to rollup book standard costs is available primarily for the purpose of introducing new products prior to the formal rollup and rollover of current costs.

Costs are rolled up based on the low level code by processing the parts at each level beginning at the lowest and continuing until the top level is reached. Therefore, if you are rolling up only specified part numbers it is assumed that the costs for any sub-assemblies or components have already been rolled up. The costs are calculated as follows:

Total Cost The sum of all top level and sub level costs.

Material If the part identifies a bill of material then
the cost is derived by taking the total of all
component material costs (excluding assemblies
but including the material costs of phantoms)
on the bill of material. Component part costs
are entered directly by the user via COST.E .

Labor If a routing record is referenced for the assembly
then labor costs are calculated based on the hours
in the routing, divided by the standard lot size,
and multiplied by the rates defined in the work
center records. Otherwise the entry made by the
user through COST.E is used.

Outside Processing This amount is entered directly by the user
through COST.E .

Fixed Overhead If a routing is present then this amount is
the sum of all of the labor amounts for each
work center multiplied by the work center fixed
overhead by the user via COST.E multiplied
by the default fixed overhead percentage.

Variable Overhead If a routing is present then this amount is
the sum of all of the labor amounts for each work
center multiplied by the work center variable
overhead percent. Otherwise it is the labor amount
entered by the user via COST.E multiplied by the
default variable overhead percentage.

Material Overhead This cost is derived by first adding together
the material and outside processing costs. This
amount is then divided by the standard lot size to
obtain the fixed portion of the material costs. The
first mount is then used again and multiplied by the
variable overhead percentage to obtain the variable
amount. The fixed and variable amounts are then
added together.

Freight If the part identifies a bill of material then
the cost is derived by taking the total of all
component freight costs (excluding assemblies
but including the freight costs of phantoms)
on the bill of material. Component part freight costs
are entered directly by the user via COST.E .

Frequency of Use
The rollup procedure may be run as often as required if current costs are being processed since it does not affect the book standards used to value inventory. The same holds true for book standards to the degree that the resultant changes in inventory values can be properly reflected through manual entries to the general ledger.

You should always run this procedure prior to running the cost rollover procedure ( COST.P2 ).

Prerequisites
All of the parts and bill of material records to be included in the rollup must be entered through the PARTS.E and BOM.E procedures as well as the material costs for each component part through COST.E . If you want the system to calculate the labor costs based on routing file data then you must also enter all of the appropriate routing records with the ROUTING.E procedure, otherwise you may enter a labor amount directly with the COST.E procedure.

Since the cost rollup relies on the low level code in the parts master to determine the order in which the parts are to be processed you must insure that these low level codes reflect the current product structure. The PARTS.P4 procedure generates the low level codes.

Version 8.10.57