As with regular items, the cost development process for co-product/by-products is based on information set up in Item Master Maintenance (1.4.1), Work Center Maintenance (14.5), Routing Maintenance (14.13.1), and Product Structure Maintenance (13.5). In addition to this data, the special product structure record, which describes the relationship between a Base Process and its Co/By-Products, is set up using Co/By-Product Maintenance (15.12.1).

Once item, work center, and process/formula information are set up, use Routing Cost Roll-Up and Product Structure Cost Roll-Up to determine the cost of the “base” process and, from that, the cost of the co-products (based on cost allocations).

By-product costs are determined separately—either manually in Item Cost Maintenance, or through its own BOM and product structure and cost roll-ups. If you enter or calculate a cost for a by-product, this cost is deducted from the base process cost prior to its allocation to the coproducts. Also note that inventory receipts of by-products will be valued at this cost.

On the following pages, those steps in the cost development process that are unique to co-product/by-product cost development, or have fields that are of special importance to co-product/by-product cost development, are discussed in more detail. Other areas, that are covered elsewhere are not repeated here (for example, setup of Work Center Maintenance).

One of the first decisions to make is whether standard or average cost method will be used. Co-product/by-product functionality can be used with either method. This section focuses on standard costing; average costing is discussed beginning on Average Cost Method.