Standard Cost Calculation Method

For each item within the specified range LN calculates the actual cost structure, based on product-structure data, actual operation rates, subcontracting rates, (simulated) purchase prices, and cost surcharges by item or item group. This only applies to the selected item and all items that occur at a lower level in the multilevel bill of material.

LN searches for items at higher levels by means of a where-used process. These items are included in the cost calculation process. When the where-used process is ready, the price of all items is calculated. So, bottom-up means that LN calculates the price of each item that could change because of a change in the price of the selected item. The prices of items that are on a lower level in the BOM are not calculated.

You can use this method if you want to know the final standard cost of an end product after changing the purchase price of a purchased part.

For each item within the specified range LN recalculates its standard cost and valuation price. However, LN does not adjust the standard costs and valuation prices of items that occur at a lower level in the structure. The existing cost structure of the underlying structure is adopted.