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Former Member

Cost Component Structure

When I am doing the settings of Product Cost planning, some areas become confusing to me. For example:

The material cost, labour cost, activity charges, etc. are picked as per the BOM, Routing etc.

But when we define the cost component structure, we give these heads and assign the cost elements. For example, we assign the raw material consumption cost elemnts against the material cost. So how the same should have to be in two places ? Please clarify me.

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2 Answers

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    Former Member
    Sep 22, 2010 at 05:49 AM

    Hi Nikhita,

    You are absolutely correct in your understanding regarding material cost, labour cost, activity charges, etc. being picked up as per the BOM, Routing etc.

    On the other hand if we want to have Product Cost report with Cost component break up , we need to assign respective Cost Elements in Cost Componenet Structure.The whole purpose of having Cost Component Structure is to have the Product Cost with detail break up ( Cost Element Wise). Mainataining Cost Componenet Structure in product cost estimate shows the Origin of the cast. This are useful for better analysis of the Product cost.

    For example if look at Cost Sheet Format, the same will look like as follows-

    Raw Material Consumption *

    Direct Labour *

    Chargeable Expenses *

    *PRIME COST ***

    Add :Factory OH *

    *WORKS COST ****

    Add:Admin OH *

    *COP ****

    Add:S&D OH *

    *COS *****

    Regards

    Jaydip

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    Former Member
    Sep 22, 2010 at 10:51 AM

    OK. Let me see. Thanks to all

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