Analyze Cost Calculation —Exercises

Basic Data Setup

Purchased and Manufactured Inventory Parts

Purpose: The purpose of this exercise is to enter two purchased and two manufactured parts used in the main exercises.

Windows:
Inventory Part

1. Enter inventory parts as described in the table below.

   Part No.	Description	Part Type	Estimated Material Cost
   XX-98-100	Wheel	Manufactured	--
   XX-98-200	Aluminum Rim	Manufactured	--
   XX-98-300	Aluminum	Purchased	300
   XX-98-400	Tire	Purchased	150

General exercise for Purchased Inventory Part
General exercise for Manufactured Inventory Part

Cost Elements and Cost Buckets

Purpose: The purpose of this exercise is to make sure required cost buckets containing cost elements exist in the site. System-generated cost buckets containing system-generated cost elements are also created when a site is created. So this step is not compulsory unless user-defined cost buckets are needed for a specific requirement.

Windows:
Cost Elements
Cost Bucket
Overhead Cost Assistant

1. Make sure at least system-generated cost buckets containing corresponding cost elements exist in the site. Create cost buckets and cost elements if needed specifically.

General exercise for Set Up Cost Elements
General exercise for Set Up Cost Buckets

Cost Templates and Assign Cost Templates to the Parts

Purpose: The purpose of this exercise is to verify the purchased and manufactured parts used in the main exercise are connected to cost templates. System-generated manufacturing and purchasing cost templates containing system-generated cost buckets are also created when a site is created. Those templates are attached to system-generated cost sets (Cost Sets 1,2,3 & 4) of inventory parts. The part type (Manufactured/ Purchased) decides which cost template is attached to the cost set of the part. So this step is not compulsory unless user-defined cost templates are needed for a specific requirement.

Windows:
Cost Template
Part Cost

1. Make sure the purchasing cost template P-110 or user-defined cost template is attached to the cost set 2 of the purchased parts.
2. Make sure the purchasing cost template P-120  or user defined cost template is attached to cost set 3.
3. Make sure these system-generated purchasing cost templates (P-110 and P-120) consist of the required system-generated cost buckets. Add / remove cost buckets to the purchasing cost template if needed.
4. Make sure the manufacturing cost template M-110 is attached to the cost set 2 and 3 of the manufactured parts. Make sure this system-generated manufacturing cost template consists of the required system-generated cost buckets. Add / remove cost buckets as required to the manufacturing cost template.

General exercise for Set Up Cost Template
General exercise for Assign Template to Inventory Parts

Work Center and Labor Class

Purpose: The purpose of this exercise is to enter the work center and labor class used in the main exercises.

Windows:
Work Center
Manufacturing Labor Class

1. Create an internal work center with the ID XXNC (replacing XX with your initials) and the description NC-Machine.
2. Enter the work center cost 150 per hour and the overhead 1 cost 30 per hour and overhead 2 cost 30 per hour in cost set 2.
3. Enter the work center cost 200 per hour and the overhead 1 cost 50 per hour and overhead 2 cost 50 per hour in cost set 3.
4. Create a labor class with the ID XXW (replacing XX with your initials) and the description Department Wheel.
5. Enter the labor class rate 160 per hour and the overhead cost 30 per hour in cost set 2.
6. Enter the labor class rate 200 per hour and the overhead cost 50 per hour in cost set 3.

General exercise for Work Center
General exercise for Define Machine Costs
General exercise for Labor Class
General exercise for Define Labor Costs

Cost Set Estimated Material Costs

Purpose: The purpose of this exercise is to enter the Cost Set Estimated Material Costs used in the main exercises.

Windows:
Part Cost Details
Part Costs

1. Query for cost sets 2 and 3 of purchased parts.
2. Enter the cost set estimated material costs for cost sets 2 & 3.

General exercise for Purchased Inventory Part

Required Data

Create Product Structure and Routing

Purpose: The purpose of this exercise is to enter the product structures and routings for your manufactured parts.

Windows:
Product Structure
Routing

1. Open the Product Structure window, query for your manufactured parts and enter the structures for your manufactured parts.
   Part XX-98-100 Wheel consists of 1 unit of XX-98-200 Aluminum Rim and 1 unit of XX-98-400 Tire.
   Part XX-98-200 Aluminum Rim consists of 1 unit of XX-98-300 Aluminum.
   Change status to Buildable for both structures.
2. Open the Routing window, query for your manufactured parts and enter the routing operations for your manufactured parts.
   Enter the following operations for the part XX-98-100 Wheel:

   Operation No.	Description	Work Center	Mach Setup	Mach Run Factor	Factor Unit	Labor Class	Labor Setup	Labor Run Factor	Factor Unit	Crew Size
   10	Prepare Assembly	XXNC	0.2	0.5	Hours/Unit	XXW	0.2	0.1	Hours/Unit	1
   20	Assembly	XXNC	0	0	Hours/Unit	XXW	0	1	Hours/Unit	1

Enter the following operations for the part XX-98-200 Aluminum Rim:

Operation No.	Description	Work Center	Mach Setup	Mach Run Factor	Factor Unit	Labor Class	Labor Setup	Labor Run Factor	Factor Unit	Crew Size
10	Machining	XXNC	0.1	0.2	Hours/Unit	XXW	0.2	0.1	Hours/Unit	1

Change status to Buildable for both routings.

General exercise for Creating Product Structure
General exercise for Creating Routing

Calculate Costs for Manufactured Part

Purpose: The purpose of this exercise is to perform a cost calculation for the parts used in the main exercise.

Windows:
All Levels Part Cost Calculation

1. Open the All Levels Part Cost Calculation dialog box and calculate costs for manufactured part XX-98-100 Wheel in cost set 2 (make sure to calculate the costs for all levels).
2. Open the All Levels Part Cost Calculation dialog box and calculate costs for manufactured part XX-98-100 Wheel in cost set 3 (make sure to calculate the costs for all levels).

General exercise for Cost Calculation

Main Exercises

Part Cost Variance Analysis

Purpose: The purpose of this exercise is to show you how to analyze part costs in different cost sets.

Windows:
Part Cost Variances

1. Open the Part Cost Variances window.
2. Query for part XX-98-100 Wheel Tire and 2 and 3 for cost sets A and B respectively.
3. Find out total level cost variance and total accumulated cost variance between cost sets 2 and 3 for the part.
4. Repeat the above steps for other parts and cost sets.

Bucket Analysis

Purpose: The purpose of this exercise is to show you how to analyze buckets and their costs for a specific inventory part.

Windows:
Part Cost Bucket Variance

1. Open the Part Cost Bucket Variance window.

2. Query for part XX-98-100 Wheel Tire and cost set 2.

3. Compare cost buckets among cost sets 2 and 3 in Cost Build-Up/ Cost Set tab while the Show all Cost Buckets in the header is selected.

4. Click Set Minimum Variance Factor and enter the minimum variance. Then click Compare and find the buckets that differ in total or level cost more than the specified minimum variance factor.

5. Select the Set Maximum Variance Factor and enter the maximum variance. Then click Compare and find out the buckets that differ in total or level cost up to the specified maximum variance factor.

6. Repeat the above steps for other parts and cost sets.

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