Calculating Estimated Costs

Note: 

  • If Standard Cost by Enterprise Unit functionality is active, the estimated costs are calculated for a specific item and enterprise unit combination.

  • For cost and service items standard cost is always defined at Company level.

The calculation procedure of the estimated order costs is similar to the standard cost calculation. Only the differences are discussed.

  1. The calculation of the estimated order costs uses other data sources. Estimated order costs are based on:

    • Ordered quantity in the production order
    • Estimated materials
    • Production planning
  2. For the estimated order costs, only the item receipt surcharges (for end items) are calculated.

  3. The fixed costs are excluded from the estimated order costs, if one of the following check boxes is cleared:

    • The Include Fixed Costs in Valuation Price check box in the Standard Cost Calculation Parameters (ticpr0100m000) session.
    • The Include Fixed Costs in Project Valuation check box in the Project Control Parameters (tipcs0100m000) session.
  4. The calculation is influenced by the Financial Transactions by Work Center check box in the Production Order Parameters (tisfc0100s000) session. If the check box is selected, for every operation the estimated order cost is accumulated from the current operation and from previous operations. The amount is stored on the WIP transfer cost component.

  5. Estimated order costs do not lead to financial transactions. The estimated order cost are used for:

    • The determination of the production results
    • WIP transfer prices
    • Preclosure posting of surcharges.

  6. Subcontracting is the process of outsourcing a part of the production process to a supplier. Two types occur:

    • Unplanned subcontracting
    • Planned subcontracting

The order estimate always includes costs for subcontracting.