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Finance | Project Operations, Human Resources, ...
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Overhead not showing on Item cost price calculation

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Posted on by 2,722

Hello all

We have calculated the item cost price for a manufactured item; however, after performing adjustments on the costing sheet, the customer indicates an overhead estimation is not displayed for level 2.

This was the original cost price estimation, from a previous cost version, executed before editing the cost sheet. Overhead estimations are displayed for level 1 and 2. Note: Overhead is defined as a surcharge percentage, based on a cost group of type Direct labor.

2746.jpg

0207.jpg

When talking about BOM calculations, we understand level 2 refers to a Sub-BOM, consumed as a component of the materials required to produce a finished good. But when we display the Tree structure, all items appear on the same level, as well as the labor components and surcharges:

4456.jpg        2364.jpg

So how is the system identifying level 1 items and level 2 items? We do know some of the BOM components are Co-products, though, so perhaps these are the level 2 items?

This is how overhead is being calculated now, with no cost estimation for level 2:

4265.jpg

Our question is the following: if calculation basis for the overhead is a cost group of type Direct labor, what does level 2 refer to?  And how do we get the system to calculate an overhead surcharge for level 2? 

I have the same question (0)
  • Ludwig Reinhard Profile Picture
    Microsoft Employee on at
    RE: Overhead not showing on Item cost price calculation

    Hi,

    What adjustments did you perform on the costing sheet?

    Can you provide more details on that?

    Many thanks,

    Ludwig

  • fgil12 Profile Picture
    2,722 on at
    RE: Overhead not showing on Item cost price calculation

    Hello, Ludwig, thank you for answering

    Modifications on the costing sheet were on the calculation of variable overhead. First, calculation basis is a cost group of type Direct manufacturing:

    5556.jpg

    Then, overhead is calculated as a surcharge percent for every finished good item group:

    3364.jpg

  • Ludwig Reinhard Profile Picture
    Microsoft Employee on at
    RE: Overhead not showing on Item cost price calculation

    Good Morning,

    Can you share what configuration has been made in the general tab for the overhead cost line?

    Many thanks,

    Ludwig

  • fgil12 Profile Picture
    2,722 on at
    RE: Overhead not showing on Item cost price calculation

    This is the configuration in the general tab:

    1805.jpg

  • fgil12 Profile Picture
    2,722 on at
    RE: Overhead not showing on Item cost price calculation

    After analyzing the Calculate item cost form, from the currently active cost price, we found all level 2 overhead cost lines are related to Co-products. So we figured something may be missing on the BOM or the Co-products' item number's configuration.

    5672.jpg

    In this company's scenario, Co-products come from planning formulas. So, where should we put our focus on, in order to get the system to calculate level 2 overhead in the new item cost price calculation?

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