When should I do cost estimate after BOM change

[Former Member]

Hi everyone: We usually do cost estimate through CK40N at the start of every month. But sometimes our BOM changes several times in the same month. If we dont update the cost estimate then there would be variance in the production order. It seems I cant update cost estimate everytime the BOM changes because there's already a realeased cost estimate. I am wondering whats the proper procedure of BOM change and cost estimate? Is it necessary to update cost estimate everytime the BOM changes?

[Former Member · Accepted solution]

Hi Liang ,

Cost can be released only once in a month .. Its not advisable to change BOM several times in a BOM. Why does it changes.

If it keeps on changing.. you have to live with the variances comming ..

Proper Process is to have a stable BOM and Cost estimate should be created after BOM . Cost Estiamte can be released once in a month ( before any material transactions )..

Regards

Sarada

[Former Member · Accepted solution]

Thanks for your reply.

Because our company is an new Joint Venture. We are on the process of localization of the products. So every little while we need to change the BOM to best suit our current manufaction and procurement.

[Former Member · Accepted solution]

Hi Lang,

Whenever you do a std cost estimate and release the price, your whole inventory is going to get revaluated at the new price. I don't think u'll want that if i have understood your scenario. My suggestion is also to keep your BOM constant for a month and analyse the input quantity variances at the end of the period.

I also did not understand why do you need or what are you trying to achieve by updating the standard price in the middle of a period.

Best Regards

Vimal

[Former Member · Accepted solution]

Thanks Vimal Because our financial manager doesnt want to process any variances generated according to BOM changing. Anyway I agree with you that we should not update cost estimate during the month because it will cause a lot of other variance.