February 17, 2013

Learned along the way . . . Component Fixed Quantity and Standard Cost Changes

A client was experiencing an issue recently with how their Standard Cost was rolling up when they specified a 'Component Fixed Quantity' in a Manufacturing Bill of Material.
The Component Fixed Quantity is used to specify a quantity of component that is 'fixed', regardless of the size of the order.  An example might be components used in the setup of an operation, but not consumed in the actual production of the finished product.  It's similar to setup labor in a routing.

The issue the client had was that the Component Fixed Quantity (CFQ) was being rolled up into the Standard Cost of the product rather than being pro-rated across the production run.
After a fair amount of research and consultation with Becky Berginski, Support Engineer at MSFT, and my colleague and GP Consultant extraordinaire, David Duncan of IBIS, we were able to determine that if you set the 'Prorate Setup Time' in the Costing Preferences Defaults window and set it to use either the Standard Quantity or Average Quantity in the Standard Cost Changes window, then set a value for the finished product in that window, the CFQ cost will be prorated over the quantity specified.  Because you can enter a value of up to 999,999,999,999, you can negate the affect of the cost of the CFQ components in the BOM. 
*click image to enlarge
*click image to enlarge
However, if you're using setup time in the routing, this will also negate the setup time prorated to the finished item.

No comments: