detail definition of rolled-up Mfg Ovhd Cost

Business Central/NAV User Forum
1

Dear All,
I would like to ask you about the detail definition of rolled-up Mfg Ovhd Cost that I read from F1-Help windows.

Rolled-up Mfg. Ovhd Cost Field
The Item Table

This field contains the rolled-up material overhead cost of the item. This is a calculation of the total material overhead cost of the components added to the material overhead cost of the parent item.

I’ve tested and tried by using some examples, but I still don’t understand the definition. I also don’t understand (after trial) why the single level mfg ovhd cost calculation of parent item influenced by single-level mfg ovhd cost of subassembly item (single level material cost of parent item) and why the rolled up Mfg ovhd cost is the sum of single level mfg ovhd cost of parent item and sub assembly item, meanwhile single level material cost of parent item = material costs of purchased item + unit cost/standard cost of sub assembly items …???

This really make me doubts and wondering…

Any answers from you I expect so much. tks beforehand.

rgds,

Mark

P.S.

This is the example I’ve tried:

items:
item A-1 = Parent item
prod. BOM A-1 = item A-2 (scrap 10%), A-3 (scrap 10%), A-4 (no scrap)
item A-2, A-3 = raw materialS
Item A-4 = Subassembly
Prod BOM A-4 = item A-5, item A-6
item A-5, item A-6 = Raw materials for A-4 only.

costs:
costing method = standard, LCY.
unit costs item A-2, A-3, A-5, A-6 = 10,000.00 LCY
ovhd rate A-1 and A-4 = 100 LCY
indirect cost % A-1 and A-4 = 10%

routings:
machines qty Routing A-4 = 3 Machines in serial, run time = 10 mins / machine, set up time = 100 mins, 100 mins and 80 mins
machines qty routing A-1 = 4 machines in serial, run time = 20, 10, 10, 7 mins; set up time = 10, 20, 70 and 20 mins

machines costs
direct unit cost all machines = 10 LCY
indirect cost all machines = 10%
ovhd rate all machines = 1
unit costs all machines = 12 LCY
costs excluding set up

the cost calculation results as follows:

  1. item A-4 total cost = 22,139.6 (standard cost);
    item A-4 raw material total costs = 20,000
    rolled-up mfg ovhd cost = single level mfg ovhd cost = 2,103.6 [(20,000 + 30 + 6) X 10% + 100]

  2. item A-1 total raw materials cost = 22,000
    item A-1 single level material costs = 44,139.6 (22,000 + 22,139.6)
    ITEM A-1 single-level mfg ovhd costs = 4,570.36 [(44,139.6 + 470 + 94) x 10% + 100]

  3. parent item A-1 rolled up mfg ovhd costs = 6,674 (4570.36 + 2103.6)

2

Hi Mark

Remove Navision completely.

How does your company compute indirect costs and the overheads attributed to the item? Does the cost of the item need to include these costs or are the costs purely purchase based with the overheads absorbed in the accounts?

I am also not clear if you have an issue with the costing or you do not understand it. Do you understand it and believe it is calculating incorrectly? If so where? Also I would recommend you break out your example into elements and build it up to make the example and explanation simpler.

3

Hi Steven, all,

tks for your reply and for other topics I’ve posted that you’ve replied.

I understand enough about the costing, but in the standard cost worksheet that makes me unable to understand is its calculation that they are as follows:

  1. Field rolled-up manufacturing ovhd cost
  2. Single level mfg ovhd cost
  3. Single level material cost
  4. rolled up material cost

Could you explain how the system calculated the field if the item’s level untill level 3 i.e. parent item → 2 items (qty per 1 pcs each) for purchase, 1 pcs item sub assembly. Sub assembly consists of 2 items for purchase (qty per 1 pcs each). Any explanations I expected so much. tks in advance

Rgds,

Mark

.

4

Hi Mark

Go into Cronus and add to the Overhead Rate field for items 1110 and 1200. Then in the worksheet run the roll up standard cost;

You use the Roll Up Standard Cost batch job to roll-up the standard costs of manufactured items. These will be influenced by the change in standard costs of components suggested by the Suggest Item Standard Cost batch job and/or the change in standard cost of capacity suggested by the Suggest Work/Mach Ctr Std Cost batch job.

Once you have run either (or both) of these batch jobs and you do the roll-up, all changes to the standard costs in the worksheet are introduced in the associated production BOMs, and the costs are applied at each BOM level.

You will see the New Rolled Up Manufacturing Overhead Cost has now altered on the items, implement the changes. The single level overhead cost shows the cost of that level of the BOM. The rolled up and single level material cost show the standard cost set agains the item itself, and the rolled up adds up the standard cost of all the components.

Try this out with simple BOM’s where you know the cost and it will become very clear.

5

Hi Steven, All,

I am understand now because I also have had a white paper recently beside answers from all of you here. More detail explained there and also I made trial and error in the system to make it more clear. It means that roll up cost mainly for parent items that has sub assembly, and it means they are levelling items.

Rgds,

Johnson