Navigation: OPM Financial : Setup : Cost Types
To enter a cost type:
1. Navigate to the Cost Types window.
2. Enter the Cost Type to represent code that identifies the costing method to be used in cost calculations.
3. Enter a brief Description of the cost type. For example, enter Standard Costing for the standard cost type. Required
4. Indicate the Cost Method you are defining:
• Standard Cost
• Actual Cost
• Lot Cost
Lot Cost
If Lot Cost is selected, then the Raw Material Calculation type and Product
Calculation types are not applicable, and they are disabled.
Lot costing, also known as Specific Identification Type costing, lets you calculate and Store costs at the lot level. That is, each lot has a unique cost associated with it and it retains this cost until the entire lot is consumed. The lot costs are computed on a perpetual basis.
• Lot costing lets you store unique costs for each lot.
• You can track the cost of a lot from its creation through all consumption.
Click the Lot Actual Cost to indicate that the lot actual cost method is used for lot cost calculation purposes. If Lot Actual Cost is selected then the Raw Material Calculation type and Product Calculation type fields are not applicable and they are disabled.
Usage
It indicates if the cost method is for general or Lab use. The general usage method is set by default. If you set the stage to general use, the cost rollup considers only the production and costing recipes. If you set the usage to lab use, the lab recipes are used over the production or costing recipes. The usage field is valid only for the standard cost type. If you are using the actual cost type, then this field is disabled.
Lot Actual Cost Type
This is only available for Lot Cost Methods. Enter a start date. The start date is used to collect all transactions that happened after the specified date for lot cost calculation purposes.
If this field is left blank, then the Lot Actual Cost process uses all transactions in the system for the OPM Company for which the Lot Actual Cost process is run. The process then selects a large number of transactions and could result in performance problem as large number of records are being inserted into the lot cost tables. It is recommended that you set this field depending on how long lots are typically held for consumption in inventory. It could be a few inventory periods from the current period. For example, if the current period is January 2004, then you can specify September 1st, 2003, to ensure all transactions from the prior three inventory periods are considered. If some of the lot costed items have lots dating further back, then specify appropriate value.
Alternate Cost Method
If the cost method is an Actual Cost method, then the check box is enabled.
If the lot cost checkbox is enabled, then the Raw Material Calculation Type and Product Calculation Type are disabled and the Start Date and Alternate Cost Method fields are enabled.
Both Standard and Actual cost methods are allowed but not Lot Actual Cost methods.
Standard Cost
Standard Cost
When you select the standard cost calculation, you define the cost of ingredients in each inventory organization during a specific period of time. The cost information remains static during each defined time period. OPM Costing calculates the standard costs of items using the Standard Cost Rollup, based on recipes, formulas, and routings defined in the OPM Product Development application
Standard cost lets you define the costs for items, formulas, formula ingredients, recipes, and resources used during the production process.
For standard costs:
• Establish the formulas, routings, and recipes
• Run the Cost Rollup process
The cost of a product is based on:
• Formulas, recipes, and routing's
• Resource costs
• Overheads
Actual Cost
Actual Cost
This is a more dynamic method of calculating Item costs based on actual inventory and resource transaction data. The following are the business transactions that are used to calculate the actual costs:
• Purchasing receipts including Freight and Special Charges estimated on the PO, returns, and corrections of receipts
• Paid Invoices
• Batch ingredient consumption and resource usage
• Opening inventory balances
• Cost overheads
• Cost adjustments
• General Ledger Expense allocations for indirect overheads
• All material transactions including internal order receipts
OPM also captures freight and special charges on a purchase order.
Allocating General Ledger expense is a method by which you can distribute the indirect expenses of manufacturing (such as administrative and general expenses) to item costs.
The balances in the expense accounts are distributed to item(s) based on either fixed percentages or dynamically derived using other General Ledger account balances, for example, statistical balances that track the item quantities or resource usages.
For Actual Cost Methods, you can establish a variety of actual cost calculations based on the raw material calculation type you associate with the cost method and the production calculation type. There are 15 different possible combinations in OPM (note the discussion for the Raw Material Calculation Type field). With the lot cost support an Actual Cost method can be defined as a Lot Cost method.
Updates to the general ledger are made using the cost method defined on the Fiscal Policy window regardless of the cost type. The description for the cost type you specified displays automatically.
Raw Material Calculation Type
You can only access this field if you are defining the Actual Costing method in the Cost Type field. Indicate the type of raw material cost calculations that will occur for this actual costing method. The valid options are listed as follows:
- Period moving average cost (PMAC)
- Period weighted average cost (PWAC)
- Perpetual weighted average (PPAC)
- Last transaction (LSTT)
- Last invoice (LSTI)
The type descriptions (shown in parentheses) are abbreviations for these calculation types. The lookup displays both the calculation type and the abbreviation. Required.
You can only access this field if you are defining the Actual Costing method in the Cost Type field. If you want OPM to derive actual costs for product components, indicate the type of calculations it should perform. The valid options are listed.
- Period moving average cost (PMAC)
- Period weighted average cost (PWAC)
- Perpetual weighted average (PPAC)
The type descriptions (shown in parentheses) are industry standard abbreviations for these calculation types; the lookup displays both the calculation type and the abbreviation.
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