Example of standard cost and valuation price calculation

This example describes how standard costs and valuation prices are calculated related to surcharges, defined on item level and on warehouse level. The difference between variable and fixed costs is ignored in this example.

In this example, item A has material costs of 10 dollars and operation costs of 6 dollars. Item A has been linked to warehouse 001 (in the general item data). The surcharges are defined as follows:

Surcharge sequence 1 2 3 4 5 6
Item A A A A A A
Warehouse ... ... 001 001 002 002
Realization moment receipt issue receipt issue receipt issue
Surcharge 2 4 3 5 1 6

Standard cost

The standard cost is the sum of the following:

  • Standard costs

    All nonsurcharges

  • Valuation price on receipt in warehouse

    All surcharges that are linked to the nonspecific warehouses (surcharges 1 and 2)

  • Valuation price on issue from warehouses 001 and 002

    All surcharges that are linked to the standard warehouse 001 of the item (surcharges 3 and 4)

This results in the following calculation:

Nonsurcharges 16 (material and operation costs)
Nonspecific surcharges 6 (surcharge 1, 2)
Specific surcharges 8 (surcharge 3, 4)
Standard cost 30 dollar

Item A is a material of item B. If item A is linked to item B in the BOM. The BOM warehouse is 003. To calculate the standard cost of main item B, the material costs of item A and the surcharges of BOM warehouse 003 are taken into account. The surcharges of item A's standard warehouse 001 are not used.

Valuation price (receipt)

The receipt valuation price is the sum of the following:

  • Standard Costs

    All nonsurcharges

  • Valuation price on receipt in warehouse

    All receipt surcharges that have not been linked to specific warehouses

  • Valuation price on issue from warehouses 001 and 002

    All receipt surcharges that have been linked to the specific warehouse

This results in the following calculation:

warehouse 001 002
Nonsurcharges 16 16
Nonspecific receipt surcharges 2 2
Specific receipt surcharges 3 1
Receipt valuation price 21 dollar 19 dollar

Valuation price (issue)

The issue price of an item in a warehouse is the sum of the following:

  • Standard Costs

    All nonsurcharges

  • Valuation price on receipt in warehouse

    All receipt surcharges that have not been linked to specific warehouses
  • All receipt surcharges that have been linked to the specific warehouse

  • Valuation price on issue from warehouses 001 and 002

    All issue surcharges that have not been linked to specific warehouses
  • All issue surcharges defined for that specific item/warehouse

This results in the following valuation and issue prices for item A in warehouses 001 and 002:

Warehouse 001 002
Nonsurcharges 16 16
NonSpecific receipt surcharges 2 2
Specific receipt surcharges 3 1
Nonspecific issue surcharges 4 4
Specific issue surcharges 5 6
Issue price 30 dollar 29 dollar