Cost Rollup Issue with Fixed and Variable Items on BOM

[Gomer79]

Attached is a document walking through our issue. Basically what it boils down to is that we have an item FOLDER10I which has a component (FOLDER10 with a cost of .2073) and is created via an outside operation which will imprint a logo. In order for the logo to imprinted we need to send extras of FOLDER10 as setup pieces. Therefore we have a BOM with 2 lines. the first is variable with a quantity of 1 and the second is fixed with a quantitiy of 25. (for the 25 setup pieces) The problem is when the cost is rolled up it creates a cost of (25+1)*.2073 = 5.3898. then if we create a work order for 300 of FOLDER10I it calculates the cost as 300*5.3898 instead of (300+25)*.2073 which is what we desire. This causes a HUGE variance on the accounting side of things. I would be greatful for any help.

Matt

 

[Krofire.com]

Have you tried rolling up your costs with an Accounting Cost Quantity of 300? What is it set to now for the parent item?

I admit some ignorance about how the Costing works with Fixed Items on the BOM but I imagine it is similar to the Setup Labour cost off of the route. It is rolled into the Parent cost based upon the average number you usually make. This average number is the Accounting Cost Quantity.

I may be wrong but what you have is probably a feature rather than a bug. It probably is designed to work that way. JDE never did anything too smart with fixed costs as other clients have found out in the past.

Let us know how you get on or if you have further questions. By the way, I was too lazy to look at your attachment so I apologise if it is all explained in there.

 

[Gomer79]

Thanks for the reply and I am sorry it took me so long to respond but I was busy on other projects yesterday.

The current ACQ is 1 and changing it to 300 did not produce any affect. This issue, which is explained in greater detail in the original attachment, is that the rolled up cost is the cost if 1 variable plus 25 fixed which is way too high. The only solution we have found so far is to set the featured cost percentage to 0 for the fixed quantity and therefore the variance is only the cost of the 25 fixed items instead of 25 times the order quantity.

JDE has told me it was functioning as the intended it to but that they may make the change in the future. (not holding my breath). I was just hoping maybe someone out there had come up with a work around. Thanks again for any help.

 

[colin_gibbons]

Yes, it is costing exactly as I would expect.
Do you raise WO's in specific qty's eg 50, 100, 150 ,200 etc...
If this was the case you could explore using batch BOM's with the fixed qty
of 25 on each.
This is a possible solution if the possible qty variations are limited.
Cost based on the Qty 1 BOM (Set ACQ to 1) and raise WO's for the appropriate
batch BOM.

Rgds

 

[Gomer79]

Re: RE: Cost Rollup Issue with Fixed and Variable Items on BOM

Unfortunately there is not a fixed number of order quantities. These work orders are created on demand from the sales order. I realize that it is costing as would be expected I was just hoping maybe there was a way to get around that. Thanks again.

 

[Kumars]

Hi

I have seen your acrobat report of cost roll-up..
As you have not set-up batch BOM, the item will be costed (25+1)*0.2073=5.3898. I feel this is perfect. Product cost will always be for an unit item. Of course, may not be satisfying your requirement.

If you can relate with a regular lot size, you try defining the percent scrap in BOM itself. This will circumvent Accounting cost qty., fixed/variable BOM and Batch BOM problems right-away.

But, you have stated that your lot size is not fixed. Based on your sample WO size, I assume that your normal lot size will vary between 300 to 500 (approx.). Your cost of FOLDER10 is also is less: 0.2073 per unit. Bearing this fact, I have a simple work-around ;

Get on with a regular BOM (without batch size, with variable BOM etc). i.e, for ONE parent item of FOLDER10I has got ONE no. of child item FOLDER10. With this set-up, you will get 300 nos of child's requirement for 300 nos of parent requirement. You may issue excess 25 components than your work order part list and you report the component scrap (25 nos of FOLDER10) later, against the WO.

Hope this suits if your client agree. And sorry for my late reply.

CHEERS,

 

[Gomer79]

Thanks for the input and advice. After looking at a number of factors they decided to set the feature cost percentage for the fixed quantity to 0. Thus when the cost is rolled up the material cost of manufacturing one FOLDER10I is the material cost of FOLDER10. They realize there will always be a variance for those setup pieces but in most cases it is negligible. Thanks again to all.