QAD Product Costing
Product Costing in QAD Enterprise Applications
This appendix provides a brief outline of Product Costing in QAD Enterprise Applications. For more information, see
QAD Product Costing Training Guide. In the standard core product, product costs are kept in two cost sets: the current cost set and the GL (standard) cost set. Additional cost sets can be defined using functionality in the Cost Management module.
All transactions are posted to the General Ledger using the GL cost set data. In a standard cost environment, the GL cost set is kept fixed for a defined period, usually the GL fiscal year. The GL standards are then reset on a regular schedule, usually the fiscal year. The GL cost set can be defined as an Average Cost using functionality in the Cost Management module.
The system can update the current cost set automatically using either the last cost (for purchase orders and work orders) or an average cost. Optionally, you can choose to not have the system update current costs.
In a standard cost environment, differences between the GL cost and the current cost are reported as variances, usually on a fiscal month basis. In an average cost environment, costs are re-averaged as they occur and variances are not reported.
The standard core product maintains product costs in five cost categories in each of the two cost sets. These five categories are: Material, Labor, Burden, Overhead, and Sub-Contract. Additional user-defined cost elements can be defined as subsets of these cost categories using functionality in the Cost Management module.
• Material costs are manually entered and are usually the purchase costs of raw materials and components.
• Labor costs can be system calculated using rates defined in the work center records and times defined in the routing records.
• Burden is variable overhead and Overhead is fixed overhead. Burden can be system calculated using rates defined in the work center records. Overhead is manually entered in the item cost record.
• Subcontract costs are entered manually and are treated as purchase costs.
The cost roll-up process begins with the Routing Cost Roll-Up and continues with the Product Structure Cost Roll-Up. A common procedure is to do all cost setup and rollup work in the current cost set until costs are verified as correct. Costs can then be copied to the GL cost set. Either cost set can be frozen to prevent unintentional cost changes and to improve system response in new item cost rollups.
Product costs can be modified at each site and can be viewed on numerous inquiries and reports.