Estimated and actual material costsTo start production, an estimate must be made of the material cost which will be corrected into actual costs at the end of production. During the generation of a production order material costs are established in the following way. Note If multisite functionality is active, all calculations are performed for an item and enterprise unit combination. Cost estimation When a production order is created, the costs related to materials are estimated. The estimated material quantities are based on the net quantities specified in the BOM of the manufactured item. The material requirements are increased, to compensate for loss of material through scrap and a limited yield of the production order. You can manually change the estimated quantities calculated by LN. It is also possible to replace or add materials, or to change certain parameter settings for the materials. Actual material costs The actual material quantities are the quantities that are issued from inventory. This determines the actual costs. The actual costs may differ from the estimated values, due to final adjustments, material replacements, yield fluctuations, and so on.
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