Standard Cost and Valuation Price

The purpose of the cost calculation is:

• Simulation
• Estimation
• Analysis

In a multisite environment there are several scenarios for triggering a standard cost calculation:

• For one enterprise unit only

  One item costing data record and enterprise unit is selected.

  Depending on the selected cost calculation method, the calculation is performed top-down, bottom-up or single level.

  Note: For materials with costing course Intercompany Transfer or Intercompany Purchase the standard costs are calculated using intercompany trade functionality. Effective standard costs of materials in the supplying enterprise unit are used to fill the source amounts.

• For all enterprise units linked to the company

  All records with costing source To be assigned, Job Shop or Purchase are selected first. An error message is shown if no records are present for a material in a selected enterprise unit. For materials with a Intercompany Transfer or Intercompany Purchase supply source, standard costs in the supplying enterprise unit are also recalculated.

  Note: When the calculation is complete for an item and enterprise unit combination, you must check if the combination is in use as intercompany supply elsewhere, and recalculate the standard costs in the destination enterprise unit.

  Once the calculations for all other costing sources are complete, select all records with the costing source Intercompany Transfer and Intercompany Purchase, if standard costs for this item and enterprise unit combinations were not already calculated during the run.

• For a range of enterprise units linked to the company

  The standard cost calculation is done in a loop for all enterprise units in the selected range. For each individual enterprise unit the first scenario is executed.

  The only exception occurs, if materials with the cost source Intercompany Transfer and Intercompany Purchase are present, and the supplying enterprise unit is selected in the range. The standard costs are then recalculated for the combination of the item and supplying enterprise unit at once.

Actual Cost

The actual cost calculation is done by using a valuation method ( standard cost, last in, first out (LIFO), first in, first out (FIFO), moving-average unit cost (MAUC), or lot costing) and is based upon economic value. The valuation price calculation is situation- and transaction-dependent. The valuation price calculation is done based on:

• Inventory value
• Issue
• Receipt
• Transfer

The purpose of the actual cost calculation is to facilitate financial transactions and accounting.

Two different prices occur within the actual cost. This depends on the moment when LN books the surcharge, which can be during the receipt or during the issue of an item. The calculation of this so-called receipt actual cost and the calculation of the issue valuation price are different. The calculations are expressed as follows:

For the receipt valuation price calculation of item A in warehouse 001, LN determines:

• The independent surcharges
• The warehouse-specific surcharges
• The item and item-group-specific surcharges

The issue actual cost is equal to the receipt valuation price plus:

• The issue item surcharges
• The issue item/warehouse surcharges
• The issue warehouse surcharges