Issue

Running PCS200 for manufactured items in divisions other than Div 100 with subcontract operations does not generate a standard cost for the operation. 

Items are setup exactly the same with a subcontract work center and linked item supplier record with a purchase price. We have only one cost model.


Resolution

Can you run PCS280 and let us know the result.
You calculate a standard cost for purchased items, distributed items, and subcontracting operations in 'Purchase/Distribution Costing. Calculate' (PCS280).

M3 Business User Documentation


M3 Financial Accounting > Product Costing


Subcontract costs

Costing Components D01-D02
Costing components D01-D02 are used for costs related to a subcontract. Costing component D01 focuses on the costs of direct materials for subcontract operations, whereas costing component D02 retrieves the subcontract overhead costs.
The cost of the subcontract operation can be retrieved from two sources:
  • Cost entered directly as a unit price for the operation in the product structure on 'Product. Connect Materials/Operations' (PDS002/H).
  • If the unit price displayed in (PDS002/H) is retrieved from a purchase agreement in 'Supplier. Connect Item' (PPS040) or 'Purchase Agreement. Open' (PPS100), this price can include both a unit cost and a setup cost. In such a case, the unit price is automatically divided into two parts when the product cost is calculated: one for the unit cost (costing component D01 and cost driver 00) and one for the setup cost (costing component D02 and cost driver 41). When the product cost is displayed according to the product costing model in 'Product Costing. Display' (PCS300), the subcontract cost is separated into two different records.
Starting Conditions for Retrieving Subcontract Cost
To be able to enter a subcontract cost directly for the operation in the product structure (alternative 1 above), you must enter the work center used as a subcontract work center. A subcontract work center belongs to resource type 2 on 'Work Center. Open' (PDS010/E).
To be able to retrieve the subcontract cost from the purchase agreement (alternative 2 above), the following starting conditions must be met:
  • The supplier must be entered on (PDS002/H).
  • The combination of this supplier and the item must be created in 'Supplier. Connect Item' (PPS040). You must use either sorting order 4 (per service process and service) or 5 (per item number, service process and service). The service process here is the product structure type used for the product structure on 'Product Structure. Open' (PDS001/B).
  • The cost from the purchase agreement must be transferred to (PDS002) as one unit price. There are two ways to transfer the cost, both with the same results: 1) Run 'Purchase/Distribution Costing. Calculate' (PCS280) and then a costing program such as 'Product Costing. Calculate Selected Item' (PCS200). Alternative 2 must be selected in the 'Costing object' field in (PCS280/E). Or: 2) Run a costing program such as 'Product Costing. Calculate Selected Item' (PCS200) and ensure that an appropriate alternative is selected in the 'Calculate purchased/distributed items' field. The formula for calculating the unit price is: Unit price from (PPS040) + Setup price from (PPS040) / Order quantity in (PDS001).
  • A purchase/distribution costing model to use for subcontract operations must be selected on 'Settings - Purchasing' (CRS780/F), parameter 21.
  • This costing model in 'Costing Model. Open' (PPS280) must include an element with costing operator 21='Setup price, to be retrieved from the purchase agreement'.
Description of Cost Driver for Costing Component D01
Cost Driver
Refers To
Comment
Driven By
00 [blank]
Subcontract cost
The formula used is: Subcontract cost in (PDS002/H) - Setup cost
Volume
Description of Cost Driver for Costing Component D02
Cost Driver
Refers To
Comment
Driven By
41
Order-initiated portion of purchase costing
The cost retrieved is the setup part of the subcontract cost displayed on (PDS002/H).
Volume
99
Material overhead cost (%)