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Item Costing#

Overview#

Fully integrated into Microsoft Dynamics 365 Business Central, the Item Costing app provides you with:

  • Consistent, highly precise, and reliable data to inform your decision-making processes in manufacturing and sales.
  • Fully customizable cost schedules and automated workflows to streamline your business operations and minimize errors.
  • Different valuation scenarios based on unit, direct unit, and last unit costs.
  • Options for specifying custom surcharges, overheads, and lot sizes, adding list prices to the item master, and comparing calculation results.
  • A history of every calculation ever performed and a powerful log function to correct calculation errors immediately.

You can create both setup and demo data with the app and use the calculations that you perform during standard posting processes, for example, to recognize the costs of material consumption by your production department or a subcontractor on your company’s balance sheet. You can also specify context-dependent overhead rates, if needed.

Setup#

Costing & Valuation Setup#

To set up the costing functionality:

  1. Choose the Search icon, enter Costing & Valuation Setup, and then choose the related link.
  2. Fill in the fields as described in the following table.

General#

Field Description
Cost Base (Raw Mat./Purchases) Specify the cost base that should be used to calculate prices for raw materials and purchased components.

Unit Cost
Uses the unit cost specified in the item master.

Last Unit Cost
Uses the last unit cost specified in the item master.

Direct Unit Cost
With the replenishment system set to Purchase, uses the unit cost that you specified for the item’s vendor (on the Unit Cost page) and the currently valid discount in percent (from the Purchase Discount Line page) to determine a value according to the best price method and based on the date of calculation and quantity entered.

Unit / Direct Unit / Last Unit Cost
Uses the direct unit cost, if available, or the last unit cost if it is not—or the unit cost stored in the item master if neither of the other two is in the system.

Note
The field can also be found on item cards, where it serves the same purpose but takes priority over the default option selected here.
Copy from Std. Cost/List Price Wksh. This field is relevant to assemblies or components with more than one item.

Specify if the cost calculations performed for each item should be entered in the item master before the values are added up to arrive at the final cost.

Single-Level
The standard cost is copied only to the item that the calculation is performed for.

All Levels
The standard cost is copied to all assemblies and components that the system found during calculation.
Decimals - Unit/Cost Amt. Specify the number of decimal places that will be used for cost and unit amounts of, for example, items, work centers, and resources (in local currency per unit).

The default setting is 2:5, that is, amounts are shown with at least two and at most five decimal places.
You can also fill in just one number here to tell the system how many decimal places should be shown each time.
Decimals - Quantities Specify the number of decimal places that will be used to display a quantity in the system.

The default setting is 2:5, that is, quantities are shown with at least two and at most 5 decimal places.

You can also fill in just one number here to tell the system how many decimal places should be shown each time.
Explode Costing BOM Specify how you want a cost structure to appear when opened. The costing BOM provides you with a condensed view of the values that you enter on cost worksheets.

Single-Level
Only shows level 0.

Rolled-Up
The BOM is completely exploded for all levels.

Unless you select the Standard costing method, the unit cost represents the average cost of an item across all available inventory.

The last unit cost, on the other hand, isn’t an average value but refers to the item’s most recent cost. The field is updated when you post documents that include the item. For more information about the costs that can be entered on item cards, see About unit cost calculation - Business Central | Microsoft Learn.

Assuming you replenish items that are consumed for make-to-stock or assemble-to-stock in regular intervals, we recommend the use of the unit or the last unit cost for cost calculations. Typically, either comes close to the actual cost posted later.

Although the cost of items that you need to buy only for a specific order can also be calculated in this way, using current purchase prices as a basis for calculation might be advisable, especially if the item is rarely ordered.

Note

In Microsoft Dynamics 365 Business Central, unit costs are calculated based on the formula Unit Cost (LCY) = (Direct Unit Cost – (Discount Amount / Quantity)) x (1 + Indirect Cost % / 100) + Overhead Rate.

In other words, the unit cost includes item charges, such as freight and precious metal fees, and discounts. The direct unit cost, on the other hand, is what you would pay for purchasing the item prior to taking charges and discounts into account.

Numbering#

Field Description
Costing Default Nos. Specify the number series that will be used for cost calculation defaults.
Cost Condition Nos. Specify the number series that will be used for cost conditions.

Note
You can use the same code for two or more series and then run the Relationships action on the No. Series page to assign them to each other.

Assembly#

Field Description
Direct Cost
No. Select from the chart of cost elements the element that will be used to assign direct costs to assembly orders.
Description Shows the description of the direct cost element.
Overhead Cost
No. Select from the chart of cost elements the element that will be used to assign indirect costs to assembly orders.
Description Shows the description of the overhead cost element.

Create Demo Data – ribbon function#

Running this action creates sample costing data by using the records in the CRONUS demonstration company.

Base data and process workflows for items ICO-0001 to ICO-0008 (which can then be used for costing and production orders, for example) are set up during this process, as well as the following records:

When you run the Create Setup Data action under the same menu item, only the data included on the bullet list will be created.

Chart of cost elements#

The chart of cost elements is the basis for cost calculations and similar in form and function to the chart of accounts in the Finance area. It is used to save, standardize, and group cost elements for comparison.

Note

A filled-in chart is already part of the demo data provided with the Item Costing app. You can use the chart as provided or customize it so that it better suits the needs of your company.

To set up the chart:

  1. Choose the Search icon, enter Chart of Cost Elements, and then choose the related link.
  2. Fill in the fields as described in the following table.
Field Description
No. Specify a unique number to identify the cost element.

You can enter a maximum of 20 characters in this field, both numbers and letters.

Note
We recommend that you specify a large enough gap between numbers so that you can add more elements later. For example, you could add a zero to the end of each account number and two zeros to the end of all account groups.
Description Enter a text to describe the calculation.
Cost Group Specify the area that the cost element will be used in when you assign an item or a capacity to the chart of cost elements based on condition statements.

Material Cost or Material Overhead
Select one of these two options if the element should be used for cost conditions of type Material (that is, if the item’s replenishment system is set to Purchase).

Material costs can be direct costs, as specified in the Last Unit Cost field, or overhead costs, calculated based on the value in the Indirect Cost %, Overhead Rate, Indirect Cost % (Consumption), or Overhead Rate (Consumption) field.

Capacity Cost or Capacity Overhead
Select one of these two options if the element should be used for cost conditions of type Capacity.

Capacity costs can be direct costs, as specified in the Direct Unit Cost field on a machine or work center record, or indirect costs, calculated from the Indirect Cost % or Overhead Rate value entered on the record.

Subcontracted Cost or Subcontrd. Overhead
Select one of these two options if the element should be used for cost conditions of type Capacity in combination with a subcontracted work center (or a machine center assigned to it).

This means that the Vendor No. field must be filled in on the relevant item card. Subcontractor costs are either direct costs, as specified in the Direct Unit Cost field on the work center or related machine center record, or indirect costs, calculated based on the Indirect Cost % or Overhead Rate field filled in there.

Mfg. Overhead
Select one of these two options if the element should be used for cost conditions of type Manufacturing (that is, if the item’s replenishment system is set to Prod. Order).

Manufacturing costs are indirect costs, which can be specified in the Indirect Cost % or Overhead Rate fields on the card of a (production or assembly) item.

Sales Overhead
Admin Overhead
Markup
Commission/Pmt. or Inv. Discount
Select one of these options if the cost element should be used for cost conditions of type Item Charge.

All describe costs that cannot be recognized on the balance sheet, that is, they represent the difference between an item’s sales and unit price.
Type Specifies the type of record.

Cost Element
Select this option for the actual cost elements, which are later used to assign calculation results to master records.

Heading
Select this option to specify a description for a group of cost elements.

Total
Select this option and set a filter on the Totaling field to add up certain elements.

Begin-Total or End-Total
The first option indicates where the totaling of cost elements should start, the second where it should end. In the latter case, another filter should be set on the elements themselves.
Totaling After you specify an interval or another type of filter to limit the number of cost elements included in a calculation, the remaining elements are totaled and shown in this field.

This means that the field must be blank for lines of type Cost Element, Begin-Total, and Heading.

For lines of type End-Total, the field is filled in automatically when you run the Indent Element Chart action from the ribbon. The elements to total are enclosed by a Begin-Total and an End-Total field.

If you select the Total option, you must manually specify the elements to add up.

Note

You must assign a cost group to each record of type Cost Element on this page. For all other lines (headings, totals, begin-totals, and end-totals), the field remains empty.

Ribbon functions#

Indent Element Chart#

Sets a filter for elements of type End-Total in the Totaling field.

Comments#

Used to store comments about a cost element. The page also shows when certain comments were added or changed.

Cost conditions#

The result of each cost calculation is assigned to a cost element based on certain conditions.

  1. Choose the Search icon, enter Cost Conditions, and then choose the related link.
  2. On the ribbon, choose New and then select one of the options for creating a condition – Material, Production, Capacity, or Item Charge.
  3. Fill in the fields as described in the following subsections.

When you’ve specified the general settings for a type of direct and overhead costs on the condition header, you can use one or more condition lines to set up exactly how you want costs to be calculated.

After you’ve set up the condition, it will be shown on the Cost Conditions page with the selected cost group specified in the Type field. You can then run one of the following functions to assign the condition to a master record (such as an item or a work center) based on that group.

Ext. Item Overhead Conditions Material or Manufacturing
Ext. Cap. Overhead Conditions Capacity
Cost Condition – Item Charge Item charges

Conditions entered on the lines have a higher priority than those specified by the Ext. Item Overhead Conditions and Ext. Cap. Overhead Conditions functions. This is true for direct costs (entered in the Direct Unit Cost field) and indirect costs (entered in the Indirect Cost % or Overhead Rate field) specified for a master table.

Note

A set of fully functional cost conditions is already part of the demo data provided with the Item Costing app. You can use them as provided or adjust them to better suit the needs of your company.

Cost Condition – Material#

On this page, which opens when you run the Create Condition – Material action from the Cost Condition ribbon, you can specify conditions of type Material.

Afterward, you can run the Ext. Item Overhead Conditions action on the page to link each condition to an item so that it can be used to calculate the cost of (purchased) raw materials.

General#
Field Description
No. Specify the number of the condition.
Description Enter a description for the condition.
Direct Material Cost
No. Select from the chart of cost elements the number that will be used for direct material costs.

Only elements of group Material Cost can be selected in this field.
Description Shows the description of the selected element.
Material Overhead Cost
No. Select from the chart of cost elements the number that will be used for indirect material costs.

Only elements of group Material Overhead can be selected in this field.
Description Shows the description of the selected element.
Lines#
Field Description
Description Enter a description for the condition line.
Cost Element Specify the cost element that the line should be assigned to.

Only elements of group Material Cost or Material Overhead can be selected in this field.

Note
If you assign an element of cost group Material Cost to the line, the system uses the direct material costs (unit cost, direct unit cost, or last unit cost) specified on the line for costing, not the cost values entered in the item master.
Cost Element Description Is filled in automatically when you select a cost element.
Row No. Fill in this field if you want to link condition lines to each other to create a valuation base for percentage charges.
Costing Type Specify what is shown in the Value field. Options are:

Percent
The number in the Value field represents a percentage.

If the Row No. field on the condition line is not filled in, the percentage is calculated based on the direct material cost (see also Chart of Cost Elements).

With the Row No. field filled in, costing is performed by using the sum of all lines that the same cost element, row number, and costing type is selected for.

Amount
The Value field represents an amount.

You can store a set amount for inclusion in costing (see also Chart of Cost Elements). Additionally, with the Row No. field filled in, this line can be linked to another where the Costing Type is set to Percent so that you can, for example, add more overhead charges.
Value The value in this field depends on the costing type that you selected.

Percent
Shows a percentage value.

If the Row No. field on the condition line is not filled in, the percentage is calculated based on the direct material cost (see also Chart of Cost Elements).

If the field is filled in, the valuation base is the total of all cost condition lines with the same row number.

Amount
Shows an amount.

Depending on the kind of cost element this field is filled in for, the amount is part of the direct material costs or of overhead (see also Chart of Cost Elements).

Cost Condition – Production#

On this page, which opens when you run the Create Condition – Production action from the Cost Condition ribbon, you can specify conditions of type Manufacturing.

Afterward, you can run the Ext. Item Overhead Conditions action on the page to link each condition to an item so that it can be used to calculate the cost of finished (that is, processed) goods.

General#
Field Description
No. Specify the number of the condition.
Description Enter a description for the condition.
Direct Mfg. Cost
No. Select from the chart of cost elements the number that will be used for direct material or other direct manufacturing costs.

Only elements of group Material Cost can be selected in this field.
Description Shows the description of the selected element.
Mfg. Overhead Cost
No. Select from the chart of cost elements the number that will be used for indirect manufacturing costs, such as tool costs.

Only elements of group Mfg. Overhead can be selected in this field.
Lines#
Field Description
Description Enter a description for the condition line.
Cost Element Specify the cost element that the line should be assigned to.

Only elements of group Material Cost or Mfg. Overhead can be selected in this field.

Note
If you assign an element of cost group Material Cost to the line, the direct material costs are not included when you calculate the overhead but will be part of the overhead rate on the costing BOM.
Cost Element Description Is filled in automatically when you select the cost element.
Row No. Fill in this field if you want to link condition lines to each other to create a valuation base for percentage charges.
Costing Type Specify what is shown in the Value field. Options are:

Percent
The number in the Value field represents a percentage.

If the Row No. field on the condition line is not filled in, the percentage is calculated based on the direct unit cost specified on the source line (that is, the material and capacity costs added together).

With the Row No. field filled in, costing is performed by using the sum of all lines that the same cost element and row number is selected for and where the costing type is set to Amount.

Amount
The Value field represents an amount.

You can store a set amount for inclusion in costing (see also Chart of Cost Elements). Additionally, with the Row No. field filled in, this line can be linked to another where the Costing Type is set to Percent so that you can, for example, add more overhead charges.
Value The value in this field depends on the costing type that you selected.

Percent
Shows a percentage value.

If the Row No. field on the condition line is not filled in, the percentage is calculated based on the direct unit cost specified on the source line (that is, the material and capacity costs added together).

With the Row No. field filled in, costing is performed by using the sum of all lines that the same cost element and row number is selected for and where the costing type is set to Amount.

Amount
Shows an amount.

Depending on the kind of cost element this field is filled in for, the amount is part of the direct unit cost or of overhead (see also Chart of Cost Elements).

Cost Condition – Capacity#

On this page, which opens when you run the Create Condition – Capacity action from the Cost Condition ribbon, you can specify conditions of type Capacity.

Afterward, you can run the Ext. Cap. Overhead Conditions action on the page to link each condition to a work or machine center so that it can be used to calculate the cost of capacities (for example, because of routings stored for processed items).

General#
Field Description
No. Specify the number of the condition.
Description Enter a description for the condition.
Direct Capacity Cost
No. Select from the chart of cost elements the number that will be used for direct manufacturing costs.

Only elements of group Capacity Cost or Subcontracted Cost can be selected in this field.
Description Shows the description of the selected element.
Capacity Overhead Cost
No. Select from the chart of cost elements the number that will be used for indirect manufacturing costs.

Only elements of group Capacity Overhead or Subcontrd. Overhead can be selected in this field.
Lines#
Field Description
Description Enter a description for the condition line.
Cost Element Specify the cost element that the line should be assigned to.

Only elements of group Capacity Cost, Capacity Overhead, Subcontracted Cost, or Subcontrd. Overhead can be selected in this field.

Note
If you assign an element of cost group Capacity Cost or Subcontracted Cost, the system will use the direct capacity or subcontracted cost entered on the line for costing, not the cost values specified in the work or machine center master.
Cost Element Description Is filled in automatically when you select the cost element.
Row No. Fill in this field if you want to link condition lines to each other to create a valuation base for percentage charges.
Setup Time With the toggle turned on, the calculation for the selected interval only includes the setup time.
Share % Specifies the percentage used to determine the unit cost based on the calculated value.
Costing Type Specify what is shown in the Value field. Options are:

Percent
The number in the Value field represents a percentage.

If the Row No. field on the condition line is not filled in, the percentage is calculated based on the direct capacity cost (see also Chart of Cost Elements).

With the Row No. field filled in, costing is performed by using the sum of all lines that the same type of condition, row number, and costing type has been selected for.

Amount
The Value field represents an amount.

The line amount is calculated by multiplying the specified value with the time scheduled for the relevant operation. Additionally, with the Row No. field filled in, this line can be linked to another where the Costing Type is set to Percent so that you can, for example, add more overhead charges.
Value The value in this field depends on the costing type that you selected.

Percent
Shows a percentage value.

If the Row No. field on the condition line is not filled in, the percentage is calculated based on the direct capacity cost (see also Chart of Cost Elements).

If the field is filled in, the valuation base is the total of all cost condition lines with the same cost element and row number.

Amount
Shows an amount. The amount is calculated by multiplying the specified value with the time scheduled for the relevant operation.

Depending on the kind of cost element this field is filled in for, the amount is part of the unit cost or of overhead (see also Chart of Cost Elements).

Cost Condition – Item Charge#

On this page, which opens when you run the Create Condition – Item Charge action from the Cost Condition ribbon, you can specify conditions of type Item Charge and then assign each condition to an item so that it can be used to calculate the cost of processed goods.

In other words, you no longer specify an item’s manufacturing cost, but the charges added to arrive at its list price.

General#
Field Description
No. Specify the number of the condition.
Description Enter a description for the condition.
Copy Price Specify where in the item master to store the item price calculated on a cost worksheet.

No
The price will not be copied.

List Price
Copies the value to the List Price field on the relevant item card.

Unit Price
Copies the value to the Unit Price field in the item master.

Sales Price
Copies, based on the sales type and sales code, the value to the sales price table related to the item.

List Price & Sales Price
Copies the value to the List Price field and the sales price table.
Sales Type Used when a list price is copied to the sales price table. Options are:

• Custom
• Customer Price Group
• All Customers
• Campaign

This field is grayed out unless the List Price or List Price & Sales Price option is selected in the Copy Prices field.
Sales Code Used when a list price is copied to the sales price table.

What you can select here depends on the sales type associated with the record.

For example, if you select sales type Customer Price Group, you can choose any customer price group available to you. This way, you can specify charge calculations for each customer group, campaign, or individual customer stored in the system.
Lines#
Field Description
Row No. Fill in this field if you want to link condition lines to each other to create a valuation base for percentage charges.
Description Enter a description for the condition line.
Costing Type Specify, if available, what is shown in the Formula/Code field.

Amount
Shows an amount. Additionally, with the Row No. field filled in, this line can be linked to another where the Costing Type is set to Percent so that you can, for example, add more overhead charges.

Cost Element
With this option, you can specify an item charge line based on the value of a cost element. The element can also be an end-total line.
Formula/Code The value in this field depends on the costing type that you selected.

(empty)
The condition line has no influence on calculations. This option can be used, for example, for headings or descriptive lines.

Amount
Shows a number with decimals. Additionally, with the Row No. field filled in, this line can be linked to another where the Costing Type is set to Percent.

Cost Element
The line represents a cost element. Using it in a calculation will fill in the Rolled-Up Amt. per UOM field automatically.

With the element option, you can, for example, determine an item charge from the value of a certain cost element. This element can also be an end-total line.

Formula
Contains an arithmetic formula. You can include a row number in this formula, for example, to calculate a valuation base. Available operators are +,–, , and /, plus nested parentheses () and special characters % and §.

Example
5% A means 5 percent of the total of all item charge lines with row number A. Assuming the total is 100, the charge would be 5, that is, 100/100
5.

§ is short for ‘percent as a fraction of 100.’

Example
5 § B means 5 percent of the total of all item charge lines with row number B. Assuming the total is 100, the charge would be 4.76, that is, 100/105*5.
Rounding Method Code Specify if you want to round the values that are calculated based on cost conditions on a cost worksheet.

The way values are rounded is determined by the rounding method selected in the item master.

You can choose to round every calculated number up or down or round to the nearest value, that is, round up only when the decimal is equal to or greater than 5.
Cost Element Specify the cost element that the line should be assigned to.

While a line can, in principle, be assigned to an element of any cost group, we recommend that you ensure each is associated with the group that you want to use the condition for.
Cost Element Description Is filled in automatically when you select a cost element.
List Price Select if the price on the line should be used as the list price.
Bold Select whether the line should appear in bold. This can be useful, for example, to visually set apart certain types of costs (such as manufacturing costs) from those on the rest of the lines.
Error Text Contains the error message that will be shown when you enter an incorrect formula.

Cost schedules#

One way to analyze the results of the cost calculations you’ve performed is to set up a cost schedule, which is similar in form and function to the account schedules that are available in the standard app and provides you with freely customizable row and column definitions.

Sometimes, the schedule might look the same as the associated cost element chart; often, however, it contains fewer details because certain data has been aggregated.

For example, you can set a filter on a schedule so that you only see the total cost of materials, without the amount being broken down into direct and indirect costs. This is possible because the system automatically assigns a value to each element of a calculation when you set up a new cost worksheet.

You can create as many schedules as you like.

Note

Two fully functional schedules (a default schedule and a cost value overview) are already part of the demo data provided with the Item Costing app. You can use them right away or customize them to better suit the needs of your company.

To set up a schedule:

  1. Choose the Search icon, enter Cost Schedule Names, and then choose the related link.
  2. On the ribbon, choose New.
  3. Fill in the fields as described in the following table.
Field Description
Name Specify the name that will be used for the schedule.
Description Enter a description for the schedule.
Default Column Layout Specify the criteria based on which values should be calculated in the schedule columns.

Afterward, you can use the Edit Schedule action on the ribbon to add calculation details.

Field Description
Row No. Specify a number that will be used to uniquely identify the line and allow its inclusion in cost calculations.
Description Enter a description for the line.
Totaling Type
Totaling
In the Totaling Type field, specify the records that you want included in costing and shown in the Totaling field.

Element Amount
Totals amounts calculated for cost components of type Cost Element.

To be able to use this option, you must set a filter on the elements that you want to include in the calculation.

Example
You enter 10100..10299 in the Totaling field. As a result, the line shows you the total of all amounts that have been specified for cost elements within the 10100 to 10299 range.

Total Amount
Totals amounts calculated for Total or End-Total elements.

To be able to use this option, you must set a filter on the elements that you want to include in the calculation.

Example
You enter 10100..10299 in the Totaling field. As a result, the line shows you the total of all amounts that have been specified for Total and End-Total elements within the 10100 to 10299 range.

Formula
Totals amounts calculated on other lines of the schedule.

To be able to use this option, you must enter a formula in the Totaling field. The formula must contain row numbers so that you can link the current line to other lines within the schedule.

Example
You enter A+B in the Totaling field. This adds up the amounts from all schedule lines where the Row No. field contains A or B.
Show Relevant to running the Cost Schedule report. Options are:

Yes
Shows the line on the report.

No
Hides the line on the report. This might be useful, for example, if the line contains a subtotal.

If Any Column Not Zero
Only shows the line if the amount on it is not zero. This prevents lines without amounts from showing up on the report, for example.
Bold If selected, bolds the line on the report.
Italics If selected, uses italics for the line on the report.
Underline If selected, underlines the line on the report.
Show Opposite Sign If selected, uses the opposite sign for line amounts on the report.
New Page If selected, inserts a page break on the report after this line.

Ribbon functions#

Delete#

Deletes the cost schedule.

Print#

Prints the cost schedule based on the specified column definition.

To be able to use this function, you need to enter at least one cost schedule line on the request page.

Insert Elements#

Copies the records on the Cost Element page to the current schedule, with one line set up for each element. The numbers of the elements are displayed in the Totaling column.

On the request page, you can choose from a list what cost elements to copy, and then choose OK to transfer them.

Edit Column Definition#

Specifies a column definition for the schedule. When you open a schedule, you can use the Assist button next to the Name field to select a definition. If none has been set up yet, choose New instead, and then fill in the Name and Description fields.

Afterward, you can fill in the fields on the page as described in the following table.

Field Description
Column No. Specify the number of the schedule column. The number is later used during cost calculations.
Column Header Specify a heading for the column.
Column Type Choose one of the following options:

Amount
Shows the amount specified for the column in the Amount Type field.

Formula
Shows the amount that results from using the formula in the Formula field.
Amount Type Select an option in this field if the Column Type field is set to Amount.
Formula Fill in this field if the Column Type field is set to Formula.
Show Opposite Sign Select this field if you want to show debit amounts as negative and credit amounts as positive values.
Show Specify if the column should always or never be shown or only shown when values are positive or negative.
Rounding Factor Specify if and how values should be rounded for clarity.
Rounding Precision This field is used when you calculate new cost values.

The number of decimal places shown for each value is determined by the options selected in the Decimals - Unit/Cost Amt. and Decimals - Quantities fields in Costing & Valuation Setup.

Extended overhead conditions#

These conditions are used to:

  1. Assign cost elements to master records, such as items or work centers.
  2. Make it easier to maintain overhead rates.

They have a higher priority than the default overhead fields…

  • Indirect Cost %
  • Overhead Rate
  • Indirect Cost % (Consumption)
  • Overhead Rate (Consumption)

…on master records such as items or work centers.

Note

Besides being a valuation base for item costing, the extended conditions are the basis for overhead calculations in standard posting processes (for example, when posting purchases or output).

The following types of overhead conditions are available:

Item overhead conditions#

These conditions can be assigned per item or item group.

To open the Ext. Item Overhead Conditions page, use the general search function or the relevant ribbon action (found under the same name on item cards).

Note

A fully functional set of extended cost conditions is already part of the demo data provided with the Item Costing app. You can use them right away or adjust them to better suit the needs of your company.

The General FastTab shows the filters available for customizing the page view. All are initially set to include the item record that you opened the page from.

Field Description
Cost Group Filter Used to limit the view to a certain cost group. Options are:

• Material
• Production
• None
Type Filter Used to limit the view to certain types of lines. Options are:

• Item
• Item Category
• Gen. Prod. Posting Group
• Inventory Posting Group
• All Items
Code Filter Can be used to further limit a view after the type and cost group filters have been set.
Starting Date Filter Restricts the lines you can see to a certain date range.

The cost conditions themselves are set up on the Lines FastTab.

Field Description
Cost Group Specify the type of cost element that the line should be used for.

Material
The condition is used to calculate the cost of raw materials (purchased items).

Production
The condition is used to calculate the cost of processed goods (manufactured items).
Type Specify the relation of the line to an item or use the field for the quick entry of a line type. Options are:

• Item
• Item Category
• Gen. Prod. Posting Group
• Inventory Posting Group
• All Items
Code Depending on the option that you selected in the Type field, enter the number of an item or a line type here.
Overhead Rate Enter the item’s overhead as an amount.

Note
This field is identical to the field on the item card but has a higher priority.

If there is more than one extended overhead condition for the item, a condition is assigned based on the hierarchy level that you specified for it in the Type field.
Indirect Cost % Enter the item’s indirect cost as a percentage.

Note
This field is identical to the field on the item card but has a higher priority.

If there is more than one extended overhead condition for the item, a condition is assigned based on the hierarchy level that you specified for it in the Type field.
Overhead Rate (Consumption) Enter an amount that specifies the item’s overhead cost based on consumption.

Note
This field is identical to the field on the item card but has a higher priority.

If there is more than one extended overhead condition for the item, a condition is assigned based on the hierarchy level that you specified for it in the Type field.
Indirect Cost % (Consumption) Enter a percentage that specifies the indirect cost based on consumption.

Note
This field is identical to the field on the item card but has a higher priority.

If there is more than one extended overhead condition for the item, a condition is assigned based on the hierarchy level that you specified for it in the Type field.
Cost Condition No. Specify the relevant cost condition cost condition.
Cost Condition Description Shows the description of the condition that you selected in the Cost Condition No. field.
Starting Date Specify from when the line should be valid.
Ending Date Specify until when the line can be used.

To delete a line, choose Delete on the ribbon.

Capacity overhead conditions#

These conditions can be assigned to capacities and are included in cost calculations performed for a machine or work center (for example, because a routing is stored with a manufacturing item).

To open the Ext. Cap. Overhead Conditions page, use the general search function or the relevant ribbon action (found under the same name on work and machine center cards).

Note

A fully functional set of extended cost conditions is already part of the demo data provided with the Item Costing app. You can use them right away or adjust them to better suit the needs of your company.

The General FastTab shows the filters available for customizing the page view. All are initially set to include, for example, the work center that you opened the page from.

Field Description
Type Filter Limits the view to certain types of lines. Options are:

• Routing Line
• Machine Center
• Work Center
• Work Ctr. Group
• All Routing Lines
Code Filter Can be used to further limit a view (to a certain work center, for example) after the type filter has been set.
Starting Date Filter Restricts the lines you can see to a certain date range.

The cost conditions themselves are set up on the Lines FastTab.

Field Description
Type Specify the type of record that the line should be used for. Options are:

• Routing Line
• Machine Center
• Work Center
• Work Ctr. Group
• All Routing Lines
Code Depending on the option that you selected in the Type field, enter the number of a certain record here if you want to further limit what work center, for example, the condition line should be used for.
Version Code Specify the relevant version code.
Operation No. Specify the relevant operation.
Overhead Rate Enter the capacity’s overhead cost as an amount.

This field is identical to the field on the work or machine center card but has a higher priority.

If there is more than one extended condition for the work or machine center, a condition is assigned based on the hierarchy level specified for it in the Type field.
Indirect Cost % Enter the capacity’s indirect cost as a percentage.

This field is identical to the field on the work or machine center card but has a higher priority.

If there is more than one extended condition for the work or machine center, a condition is assigned based on the hierarchy level specified for it in the Type field.
Cost Condition No. Specify the relevant cost condition.
Cost Condition Description Shows the description of the condition that you selected in the Cost Condition No. field.
Starting Date Specify from when the line should be valid.
Ending Date Specify until when the line can be used.

To delete a line, choose Delete on the ribbon.

Item Charge Conditions#

On this page, you can assign a charge calculation to an item (see Cost Condition – Item Charge) to determine costs that aren’t recognized on the balance sheet (=that aren’t part of the item’s unit cost).

You can also enter other direct costs on the lines of the page, which can be opened from item cards.

The General FastTab shows the filters available for customizing the page view. All are initially set to include the item that you opened the page from.

Field Description
Cost Group Filter Limits the view to a certain cost group. Options are:

• Charge
• Other Direct Cost
• None
Type Filter Limits the view to certain types of lines. Options are:

• (blank)
• Item
• Item Category
• Gen. Prod. Posting Group
• Inventory Posting Group
• All Items
Code Filter Can be used to further limit a view (to a certain item, for example) after the type filter has been set.
Starting Date Filter Restricts the lines you can see to a certain date range.

The cost conditions themselves are set up on the Lines FastTab.

Field Description
Cost Group Specify the type of cost element that the line should be used for. Options are:

Charge
The condition is used when you calculate the cost of a processed item. The valuation base in this context is therefore not the item’s cost of production but the charges added to its list price.

Other Direct Cost
The condition is included as part of the landed costs that are not based on quantities sold or manufactured.
Type Specify the relation of the line to an item or use the field for the quick entry of a line type. Options are:

• Item
• Item Category
• Gen. Prod. Posting Group
• Inventory Posting Group
• All Items
Code Depending on the option that you selected in the Type field, enter the number of a record here if you want to further limit what item, for example, the condition line should be used for.
Cost Condition No. Specify the relevant cost condition.
Cost Condition Description Shows the description of the condition that you selected in the Cost Condition No. field.
Starting Date Specify from when the line should be valid.
Ending Date Specify until when the line can be used.
ODC Code If available, enter the relevant additional direct cost.
Qty. per Unit of Measure Enter the quantity for the item’s unit of measure.
ODC per Unit Specify the item’s other direct cost per unit.
ODC Element No. Specify the cost element for the item’s other direct cost.
ODC Description Shows the description of the other direct cost selected in the ODC Element No. field.

To delete a line, choose Delete on the ribbon.

Costing Defaults#

You can run this function from an item cost worksheet to set up (and edit) a variety of lot sizes for cost calculations. The values that are used by this action can already be specified on the relevant item card (by running the function with the same name there).

Note

The defaults only apply to the item that is currently being calculated on the cost worksheet. Defaults that might have been specified for an assembly at a lower level are ignored, which means that the assembly’s lot size is retrieved from the relevant item card instead.

Field Description
No. Is filled in automatically from the number series that you set up for this purpose.
Item No. Is filled in automatically with the item number entered on the worksheet.
Description Specifies the description of the item.
Starting Date Specifies from when the default value can be used.

The date of reference in this context is the date on which you run the Calculate function on the worksheet.
Ending Date Specifies until when the default value can be used.

The date of reference in this context is the date on which you run the Calculate function on the worksheet.
Lot Size Specifies the lot size that you want to calculate costs for.
Default If you turn on the Only Default Costing Values toggle when running the Calculate function, only lot sizes that this field is selected for are used.

Note
The lot size that is entered on the item card is not used if valid costing defaults are found during calculation.
Comment Shows whether comments exist for the default value.

You can also use this field to enter comments, if needed.

Note

If more than one default value is found for a worksheet line, the system sets up a calculation for each value specified as being valid at the time.

Item cost worksheets#

This worksheet is used to determine the cost of manufacturing certain goods. It can be opened from the ribbon of an item card.

Worksheet lines#

On the worksheet lines, you can see (if available) the calculations that have already been performed for the item.

Field Description
Warning (blank)
The line is free of errors and can be retrieved, if required.

Errors
The line shows one or more errors. You can open the error log to view and resolve them one by one. After each has been corrected, you must refresh the worksheet.
Costing Entry No. Shows an entry number for the line.

Lines with different item costing defaults (=lot sizes) use the same entry number.
Costing Description Shows the description entered for the completed calculation run.
Item No. Specifies the item that costs were calculated for.
Description Shows the description of the item.
Replenishment System Specifies the item’s replenishment system.
Status Specifies the status of the line.

• (blank)
• Preferred
• Rejected
• Adopted

For more information, see Change Status.
Lot Size Specifies the lot size that costs were calculated for.

Note
Depending on the circumstances, the system might use the lot size entered on the item card or the size specified as part of the costing defaults.
Calculation Date Shows when the worksheet line was calculated.
Standard Cost Shows the standard cost entered on the associated item card.
New Standard Cost Shows the new standard cost for the item.
Indirect Cost % (Consumption) If available, shows (in percent) the indirect cost calculated from posted consumption.
Overhead Rate (Consumption) If available, shows (as an amount) the overhead calculated from posted consumption.
List Price Shows the item’s previous list price.
New List Price Shows the item’s adjusted list price.

Ribbon functions#

Calculate#

Calculates the costs of manufacturing the selected items.

Field Description
Calculation Date Shows when the calculation is performed.

The date in this field is then compared against the starting and ending dates of the specified direct unit costs, cost conditions, production BOMs, and routings to determine their validity when running the function.
Calculation Run Description Specify the type of calculation. You must fill in this field.
Only Default Costing Values Specify if the lot size of the item that you want to calculate costs for should be copied from the item card or the costing defaults.

With the toggle turned off, the system retrieves the lot size that was specified as part of the costing defaults. If none exists, the size is copied from the item card.

With the toggle turned on, only a valid lot size that the Default field is selected for takes priority over the size entered on the item card.

Note
The setting applies only to the first level, that is, the item to calculate.
Change Status#

Sets the status of the worksheet line to Preferred or Rejected.

The status is used for the Adopt Preferred Entries action, as the function copies only lines in the Preferred status. Cost values that have been copied are set to Adopted automatically.

Get Error Log#

Lists all errors that occurred during calculation. You can work on the errors by using the lookups next to the relevant fields or by running the Show action on the ribbon.

Note

You need to refresh the calculation after correcting the errors.

Adopt Preferred Entries#

Copies the worksheet lines in the Preferred status to the relevant item card. You can also use this function to revalue item ledger entries that have not been posted yet.

Field Description
Posting Date Corresponds to the valuation date. This field is required for the revaluation journal.
Fill Revaluation Journal Turn on this toggle if open item ledger entries should be revalued.

In the Copy From field, you can also specify if you want to revalue the entire cost structure of each line or only the item entered on it.

The revaluation journal can be checked following calculation, as it needs to be posted manually in any case.
Document No. Specify the number of the document that the revaluation journal should be copied to.
Item Journal Template Specify the revaluation journal template that you want to use for the function.
Item Journal Batch Name Specify the revaluation journal name that you want to use for the function.
Copy From Single-Level
Updates only the costs of the item entered on the worksheet line and ignores items on lower levels.

All Levels
Updates all item costs and cost fields within a cost structure.
Costing Defaults#

Simulates the costs of manufacturing items in different lot sizes.

Typically, these costs have already been entered as costing defaults on the relevant item card. If necessary, you can change them here or set up new entries.

For more information, see Item Costing Defaults.

Cost Values (Overview)#

Creates a cost schedule based on the specified column and row definitions, showing you the costs calculated on the worksheet according to the filters you set. You can also choose a second column definition here if you want to compare one worksheet to another.

Cost Values (BOM)#

Shows all calculation values broken down by cost group.

You can open the source documents associated with each line by running a ribbon function.

Explosion of BOM#

Lists all levels and costs calculated for a worksheet in aggregated form.

Field Description
Item Cost Wksh. 1 Filter Choose the worksheet that you want to see.
Include Overhead Turn on this toggle if you want overhead included in the totals.
Material Only Turn on this toggle if you want to see only the costs of materials.
Explosion Level Specify across how many BOM levels costs should be shown.

Single-Level
Explodes the costing BOM only for the top level.

Rolled-Up
Shows costs exploded to the last assembly or component.
Compare BOM Explosion#

With this function, you can compare two item cost worksheets. The comparison is visualized so that you can easily identify the differences to the previous worksheet.

Field Description
Item Cost Wksh. 1 Filter Choose the worksheet that you want to compare to another.
Item Cost Wksh. 2 Filter Choose a second worksheet that you want to compare against the first.
Include Overhead Turn on this toggle if you want overhead included in the totals.
Material Only Turn on this toggle to compare only the cost of materials.
Explosion Level Specify across how many BOM levels costs should be shown.

Single-Level
Explodes the costing BOM only for the top level.

Rolled-Up
Shows costs exploded to the last assembly or component.