Realized Consumption of Indirect Costs

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Posted on by 1AR

In the costing sheet, I added some indirect cost with type as Rate and absorption to the process (Route process).

When I estimated the batch order Estimated Consumption in the Process and Indirect costs are same (in hours) - Both are 2 hours

But, when I report as finished, there's a huge difference in the Estimated consumption and realized consumption of Indirect costs. After some analysis I found that Realized consumption is a sum of the Process Hour of FG and SFG.

For Example,

SFG Process hour is 1

FG Process Hour is 2

SFG Indirect cost realized consumption is 1 (which is correct)

FG Indirect cost realized consumption is 1+2 (Which is sum of process hours of SFG and FG)

Expected result for me is to have the Indirect cost realized consumption calculated based on the process hours of Current batch order and not based on the sum of FG & SFG Process hours.

Is there any configs or setups available to achieve this ?

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Dynamics 365 Supply Chain Management

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The issue you're seeing with indirect cost calculations in Dynamics 365 occurs because the system sums process hours from all production levels (e.g. SFG and FG) when calculating realized consumption. This results in indirect costs being based on the total hours of both SFG and FG, rather than just the FG batch. To fix this, you’ll need to adjust the costing sheet settings, indirect cost rates, and production control parameters to ensure costs are allocated only to the current batch. Additionally, check the route cost groups to prevent costs from being rolled up from lower production levels. If no configuration change can achieve this, manual adjustments or a customization might be needed. Testing with different costing versions can also help confirm the correct setup.

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