Effect of Item Planning Data
Material costs for product structures depend both on the quantity of each component used and on the scrap percentage and cumulative yield for the parent assembly. Products may have less than 100% yield through operation processing. Item planning data can be set up to recognize expected yield. If components are scrapped during the assembly process, expected loss can be recognized by the component scrap factor in Product Structure Maintenance (13.5).
The material portion of the Product Structure Cost Report (13.12.4; enhanced .NET UI version at 13.12.28) shows the impact of the component cost, scrap percentage, and yield.
Example: Standard purchase cost for an item is $.05, but its 5% scrap percentage results in a total component cost of $.05555556 ($.05 / [100% – 5%] or .05/.95). Similarly, the sum of all components in a product structure (1.38) is divided by the inspection yield percentage (80%) to arrive at the total material cost (1.725).
Maintaining Item Costs
The system automatically posts labor, burden, and subcontract costs to this-level and lower-level item cost fields when you run Routing Cost Roll-Up (14.13.13) and Product Structure Cost Roll-Up (13.12.13). The system also rolls up lower-level material cost, assuming that the current or standard purchase price for an item has been added as a this-level material cost.