Create Costing Model

This document explains how to build a costing model to determine the cost of manufacturing a product and determine the price at which to sell it.

The structure of the costing model dictates how critical production-related costs are shown. Costing components and costing elements determine which categories of product costs are displayed in the model and how the costs are calculated. The costing model defines the sequence in which the costs of a product are displayed.

Outcome

One or more costing models, which are structured to provide optimal cost information and reflect the costing needs of specific products.

Use the costing model to:

  • Display costs for various products in the desired sequence
  • Identify the standard cost of the product
  • Perform variance analyses on two different costing dates
  • Perform costing inquiries and simulation

The costing models are stored in the MCCCID table.

Before you start

  • You must have a good understanding of the company's processes and how different types of materials, sizes and tolerance requirements interact.
  • You must have done a thorough analysis of the company's costing needs and identified the cost categories you want to highlight.
  • Costing components must have been created in 'Costing Components. Open' (PCS010).
  • Costing elements must have been created in 'Costing Elements. Open' (PCS015).

Follow these steps

Create costing model

  1. Start 'Costing Model. Open' (PCS025/B).

  2. Enter the ID of the product costing model. Select Create.

  3. On the E panel, enter the name and description of the model. Press Enter.

Connect costing components and costing elements

  1. On the (PCS025/B) panel, select the 'Model structure' option.

  2. On (PCS026/B), enter the sequence number and a valid date. Select the Create option.

  3. On the E panel, enter a valid date and the ID of the costing component or costing element to connect. Press Enter.

  4. Repeat steps 1-3 to connect further costing components and costing elements.

Parameters to set

Program ID/Panel Field The field indicates …
(PCS025/B1) Costing model – product costing

…the ID of the product costing model.

You can use alphanumeric characters in the name.

You can build several costing models – for example, one that is very detailed for an entire product category and others that are very small, consisting of only a few costing components or costing elements.

Select a general costing model for manufacturing in 'Settings – Product Costing' (PCS001). You can also select a manufacturing costing model for one item per facility in (MMS003). For maintenance, you normally select a costing model in 'Settings – Maintenance 1' (CRS788/F). For services per facility, you normally select a costing model in 'Service. Connect to Facility' (MOS301/F).

You can select a different costing model when costing a specific product in the costing programs, such as 'Product Costing. Calculate Selected Item' (PCS200).

(PCS026/E) To date

…the final validity date of the costing component or costing element.

A costing component or costing element that is past its "To date" can still be connected to a model, but it will not be included in the costing run if the costing date is later than the To date. The component or element will not be displayed in the costing model in 'Product Costing. Display' (PCS303/B) if the costing date is later than the date set in this field.

(PCS026/E) Element/component

…the ID of a costing element or costing component.

Costing components are used to calculate and display different categories of production-related costs, such as operation costs and material costs. Once a product has been costed, its costing components and elements act as "headings" for various costs in the costing model. See the settings instructions for details on how to define costing elements and costing components.

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