Low cost product with less cycle time

[Former Member]

Hi All,

       We are using Product costing to calculate the price for our in house produced materials based on master data values. Our product price is too low as well as using less cycle time to produce the material. The problem we are facing here is, while we running product costing, system doesn't calculate Activities cost (setup/machine/labor). We understood that it's because of low cycle time as well as the calculated activity cost  is very minimal ( like 0.0000345). Since, we are maintaining only 2 decimal places for currency unit. so, system didn't display with any value. If we are increase the costing lot size, then setup activity cost may be zero and both machine and labor cost will be calculate as minimal. For example, one FERT and 3 stages of HALB (HALB1, HALB2, HALB3) and ROH are used. We maintained proper BOM as well as routing. When we calculate the price for HALB1, activities cost are zero. This may be used as a component of next stage HALB2. So their price also not calculated properly, because first stage HALB1 price was not included with activity price and so on for further upper level assembly materials. If we are maintaining costing lot size, based on our input, machine and labor activity cost will be calculate but setup activity cost become zero. How we can handle this scenario ( Low cost product with less cycle timing ) in product costing?

      We have 3 operations ( for an material Example, HALB1 ) which are using different work centers. Their setup time as well as lot size are totally different. 

       What should I do to AVOID ZERO activity cost for Direct labor, Indirect Labor,etc?

Thanks

-Repost from discussion Costing Lot size of material in Product costing | SCN

[OwenLiu]

Hello Athena,

Can you attach the itemization view of CK11N?

Best Regards,

Owen

[Former Member]

Is this correct?this is our setup in work center.

[kamalkumar_biswas2]

Hi Athena

You are posting same issue in different way..

I can suggest you to take following steps:

1. Activity unit keep min or if possible seconds

2. Keep lot size 100000

3. Formula parameters minimum like 1 or 10

I think your issue may resolved

kamal

[Former Member]

I will test your number 1 & 2 suggestion.

But how can I do the number 3?Formula parameters?

[Former Member]

Hello Kamal,

When I changed the activity unit into Minutes or seconds,

the resulting direct labor cost becomes zero!

So I will keep it as is in Hour.

And when I changed the costing size into 100,000.

Direct Labor becomes zero as well.

Here is the screen shot before and after

Before

After

[kamalkumar_biswas2]

Hi Athena

It is not zero..it becomes 0.10 from 0.01  so what you are telling is confusing..

Another point..when you are changing activity unit to min then you have to define activity qty in routing operation in min..suppose presently it is 1 hour for 10000 pc now it will be 60 min for 10000 pc..I think you didn't change it ..

I think it will work..do every thing correct with logic

Kamal