Roadmap for Cost Accounting [AX 2012] - AXUG

Roadmap for Cost Accounting [AX 2012]Updated: August 20, 2014

Applies To: Microsoft Dynamics AX 2012 R3

This topic provides a set of resources for structured learning of cost accounting in supply chain management in Microsoft Dynamics AX 2012. The topics and resources listed here provide background and conceptual information to help you learn about cost accounting.

Cost accounting is used to measure and report financial information that is related to an organization’s acquisition, consumption, and use of resources. In particular, cost accounting in Microsoft Dynamics AX 2012 lets you plan, manage, and track costs for inventory, manufactured goods, and overhead. With Microsoft Dynamics AX 2012, you can use a normal costing method and a standard costing method to plan and manage costs.

Learn

Define

Maintain

Perform

Use WebSearchAX to search community content for “costing”. Also, search blogs and white papers for “costing”.

Microsoft Dynamics AX 2012 R3 Cost Accounting Help (article)

Microsoft Dynamics AX 2012 R3 Supply Chain (blog)

Microsoft Dynamics AX 2009 White Paper: Cost Management(white paper)

Microsoft Dynamics AX 2009 White Paper: BOM Calculations Using Costing Sheet (white paper)

Microsoft Dynamics AX 2009 White Paper: Standard Cost Conversion Guide (white paper)

LearnHere’s what you need to do before you deploy and configure cost accounting. These topics will help you learn about the new features for Microsoft Dynamics AX 2012.

Task Videos and topics

Learn about what’s new in cost accounting Microsoft Dynamics AX 2012 R3 Inventory aging report (video)

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Microsoft Dynamics AX 2012 R3 – Price compare report (video)

What's new: Inventory and warehouse management features

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DefineHere’s what you need to do to define a cost accounting policy to comply with the accounting policy that is used in your organization. You will also learn what you need do to define a structure to make sure that costs and revenues can be captured and allocated between cost centers and profit centers.

Define a cost accounting policy for inventory

Task Topics

Understand the inventory valuation process About inventory close

About physical and financial updates

About running average cost price

Track running average cost per inventory dimension

Understand the inventory valuation method About FIFO with physical value and marking

About LIFO with physical value and marking

About LIFO Date with physical value and marking

About weighted average with physical value and marking

About weighted average date

About moving average

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Define a cost accounting policy for manufacturing products

Task Topics



Understand cost information that pertains to manufacturing products

Set up production control parameters

About cost categories used in production routings

About co-products and by-products

About the methodology for total cost allocation

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Define a cost accounting policy for indirect costs

Task Topics

Define rules for calculating indirect costs About costing sheet setup

Example of a costing sheet setup

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Define a cost allocation policy for overhead

Task Topics

Define rules for allocating overhead Define an internal cost allocation

Define a surcharge allocation

Create hierarchy structures

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MaintainHere’s what you need to do to set up, create, and maintain predetermined costs as well as allocation for overhead. You will also learn how to maintain cost and revenue forecasts that can be used in the predetermined cost calculation.



Maintain predetermined costs

Task Topics

Set up predetermined costs

About cost groups

About BOM calculation groups

Costing version setup (form)

About costing versions

Create predetermined costs

Calculation for a costing version (form)

Prepare to maintain standard costs for purchased items

Prepare to maintain standard costs for manufactured items

Calculating standard costs for manufactured items

About costing versions containing item purchase prices related to BOM calculations

About costing versions containing item sales prices related to BOM calculations

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Maintain allocation for overhead

Task Topics

Learn about the allocation process Create a cost accounting accrual scheme

Create cost accounting accrual transactions

Create rules for allocating overhead Create reference tables

Distribute costs or quantities

Learn how to budget for overhead About cost accounting budgeting

About cost budgeting

About service budgeting



About flexible budgets

About setting up a budget model for flexible budgets

Transfer actual costs in a flexible budget

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PerformHere’s what you need to do to calculate the inventory valuation and cost of goods manufactured.

Perform inventory accounting

Task Topics

Perform inventory valuation Closing and adjustment (form)

Adjustment of on-hand inventory (form)

Adjust transactions

Inventory transaction posting (form)

Trace inventory settlement transactions

Cost explorer (form)

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Perform product costing

Task Topics

Calculate the cost of goods manufactured About estimated costs for a production order

Run an estimation

Production control

About production posting



Community Additions

About analyzing costs for a production order

About lean manufacturing

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Perform variance analysis

Task Topics

Analyze the difference between actual costs and standard costs

About analyzing variances for a completed production order

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Announcements: To see known issues and recent fixes, use Issue search in Microsoft Dynamics Lifecycle Services(LCS).

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Community Additions

Setting up and maintaining cost accounting [AX 2012]

Updated: October 17, 2012

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012 Feature Pack, Microsoft Dynamics AX 2012

The following topics provide information about how to set up cost accounting.

Topic Description

About cost accounting integration

Provides conceptual information about how cost accounting is integrated into other modules.

About configuring cost accounting

Provides conceptual information about how to configure cost accounting.

About settings for cost accounting

Provides conceptual information about additional settings that you can configure in cost accounting.

See alsoCost accounting


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> Application users > Cost accounting >

About cost accounting integration [AX 2012]

Updated: July 16, 2013


Cost accounting integrates with the following modules:

• General ledger

• Production control

• Project management and accounting

Cost accounting and General ledgerThe General ledger module is the main link to Cost accounting. All financial values in Microsoft Dynamics AX pass from General ledger to Cost accounting.

When you first set up Cost accounting and set the parameters in the Cost accounting parameters form, you must make several decisions regarding integration. Base your decisions on the following issues:

• The dimensions to use in Cost accounting

• Whether the cost categories in Cost accounting should be identical to the ledger accounts in General ledger

• The posting layers that are important for Cost accounting

There are additional potential integration points for budgeting between Cost accounting and ledger accounts in General ledger. For example, you can import financial budget values from Cost accounting or transfer Cost accounting budgets to the ledger accounts in General ledger.




Setting up and maintaining standard costs

Setting up and maintaining cost categories

Other Versions

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Cost accounting and ProductionIntegrate Cost accounting and Production control by importing production hours from production orders to the Service category tab in the Cost categories form. You define the integration in the Service transactions field group. You must select dimensions in the Debit dimension and the Credit dimension fields to determine how to credit and how to debit the service quantity.

Cost accounting and ProjectYou can also integrate Project by setting up the Service category tab in the Cost categories form. You must select the dimension to credit and the dimension to debit.

See alsoSetting up and maintaining cost accounting


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About settings for cost accounting [AX 2012]



The following steps will help you complete the base configuration for cost accounting.

Step Form or situation Description

1 Line structures Group cost and service categories. The Expense distribution sheet and some inquiries are based on the line structures.

2 Hierarchies Group dimensions. By using this functionality, you can easily create a profit center structure. You can execute some inquiries and reports based on the hierarchies.

For more information, see Create hierarchy structures.

3 Expense distribution sheet

Create reports on your own.

For more information, see Create an expense distribution sheet.

4 Reference tables Create the reference tables that you want to use in distributions and allocations.

In this form, you can only create the reference tables. To enter the values, click Calculation versions > Reference table values.

For more information, see Create reference tables.

5 Calculation versions

Validate and summarize distributions and allocations.






Other Versions

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6 Accrual schemes Create accrual schemes.

For more information, see Create a cost accounting accrual scheme.

7 Budget model Create budget models.

For more information, see About cost accounting budgeting.


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About configuring cost accounting [AX 2012]



Microsoft Dynamics AX offers many configuration and setup options for cost accounting, but only some of them are necessary for the mandatory or basic setup.

Note

In general, you do not have to follow the order in which these steps are described. However, because of certain interdependencies, you may have to perform one step before another.

To simplify the configuration process, the process has been divided among the following procedural topics:

• About settings for cost accounting

See alsoAbout cost accounting integration







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Setting up and maintaining standard costs [AX 2012]Updated: February 9, 2011


The topics in this section provide information about how to set up and maintain standard costs.

Prerequisites for standard costs

Standard cost conversion overview

Maintaining standard costs in a nonmanufacturing environment

Preparing to maintain standard costs in a manufacturing environment

Preparing to maintain standard costs in a manufacturing environment with routings


Maintaining standard costs in a manufacturing environment


© 2017 Microsoft

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> Cost accounting > Setting up and maintaining cost accounting >

Prerequisites for standard costs [AX 2012]

Updated: November 5, 2010


This topic covers the basic steps for using standard costs. Subsequent steps depend on the company’s operations, such as a nonmanufacturing environment, a manufacturing environment without routings, and a manufacturing environment with routings.

Prerequisites for standard costs


About costing versions for standard costs

About managing standard cost updates



Standard cost conversion overview

Maintaining standard costs in a nonmanufacturing environment

Preparing to maintain standard costs in a manufacturing environment

Preparing to maintain standard costs in a manufacturing environment with routings


Maintaining standard costs in a manufacturing environment

Page 1 of 3Prerequisites for standard costs [AX 2012]

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To set up standard costs, follow these steps:

1. Create an item model group for standard costs.

Use the Item model groups form to create a new group for standard costs and to assign an inventory model of Standard cost. The identifier for the item model group should be meaningful, such as Std Cost. Select the check boxes to indicate that the group should allow financial negative inventory, post physical inventory, and post financial inventory. This standard cost group will be assigned to items.

2. Define ledger accounts that are related to standard cost variances.

Use the Chart of accounts form to define ledger accounts that are related to standard cost variances. These ledger accounts must be defined before they can be assigned in the Posting form. The ledger accounts can reflect item groups and cost groups.

3. Assign ledger accounts to item postings that are related to standard cost variances.

Use the Posting form to assign the ledger accounts that are related to standard cost variances. You can choose whether to specify a variance’s ledger account by item (or item group) and by cost group (or cost group type), or to specify that the ledger account applies to all items and all cost groups. These choices correspond to cost relations for tables, groups, and all.

Use the Transaction combinations form to enable the use of cost relations (for tables, groups, and all) before you define the item posting rules.

4. Define inventory parameters that are related to standard costs.

Use the Inventory parameters form to define cost control parameters (on the Bills of materials tab) to define two parameters that are related to standard costs.

◦ Use the Cost breakdown field to select No or Sub ledger. The selection of Sub ledger is termed an active cost breakdown. An active cost breakdown is critical for calculating, retaining and viewing cost group segmentation across a multilevel product structure for standard cost items. When the cost breakdown is active, you can report and analyze inventory, work in process (WIP), and cost of goods sold (COGS) per cost group in a single level, multilevel or total format. An active cost breakdown means that activating a manufactured item’s cost will result in storing the cost group segmentation within the item’s cost record.

The selection of none for the Cost breakdown field means that cost group segmentation will not be maintained for standard cost items. That is, a manufactured item's standard cost will be calculated and maintained as a single amount without cost group segmentation, and the cost contributions of manufactured components will be aggregated into the single amount.

◦ Use the Variances to standard field to select summarized or per cost group. The selection of per cost group enables you to identify purchase price variances and production variances by cost group, and also identify the four types of production variances: the lot size, quantity, price and substitution variances. The selection of summarized means that you cannot identify variances by cost group, and you cannot identify the four types of production variances. You can only view a summarized production variance.






The policy about variance to standard works independently of the cost breakdown policy. That is, you can select a cost breakdown policy of none, and select variances per cost group, so that production variances by cost group will still be captured.

5. Create costing versions for standard costs.

Use the Costing version setup form to create one or more costing versions for standard costs. Each costing version must be designated with a costing type of standard costs and allow content to include cost data.

6. Prepare an existing Microsoft Dynamics AX customer to use standard costs.

Customers who want to change their existing items to a standard cost inventory model must use the Standard cost conversions form.

See alsoMaintaining standard costs in a nonmanufacturing environmentPreparing to maintain standard costs in a manufacturing environment with routingsPreparing to maintain standard costs in a manufacturing environmentCalculating standard costs for manufactured itemsMaintaining standard costs in a manufacturing environmentAbout costing versions


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About costing versions [AX 2012]



A costing version can serve one or more purposes based on the data that is contained within the costing version. The primary purpose of a costing version is to contain cost records about items, cost categories, and indirect cost calculation formulas. A costing version can contain a set of standard cost records or a set of planned cost records that are based on the costing type that is assigned to the costing version.

• Standard costs − A costing version can support a standard cost inventory model for items, where the costing version contains a set of standard cost records about items and manufacturing processes. Cost data about manufacturing processes is expressed in terms of the cost categories for routing operations and the calculation formulas for manufacturing overheads.

• Planned costs − A costing version can contain a set of planned cost records about items and manufacturing processes. A costing version with planned costs is often used to support cost calculation simulations, such as simulating the effect of cost changes to purchased materials or manufacturing processes on the calculated costs of manufactured items. The item cost records for planned costs can also be used to support an actual cost inventory model by providing the initial values for item costs, including the calculation of planned costs for manufactured items.

Maintaining cost records within a costing version involves entering costs for purchased items and for items that are transferred between sites. Additional data maintenance for manufacturers involves entering costs for cost categories, which are associated with routing operations; entering calculation formulas for the indirect costs reflecting manufacturing overheads; and calculating costs for manufactured items.

The item cost data within a costing version will consist of one or more cost records for each item. An item cost record is initially entered with a pending status and an intended effective date. Activating the item cost record updates the status to active and the effective date to the activation date. Different item cost records may reflect different sites,






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effective dates, or status. When calculating costs for manufactured items for a future date, the BOM calculation will use cost records with the relevant effective date whether status is pending or active. An item's current active cost record will be used for estimating production order costs and valuing inventory transactions under a standard costing inventory model. The maintenance of cost records for cost categories and indirect cost calculation formulas is similar to the maintenance of item cost records.

Two blocking policies for a costing version determine whether pending costs can be maintained and whether the pending cost can be activated. Use the blocking policies to permit data maintenance, and then to prevent data maintenance for cost records within a costing version.

A costing version can also contain data about item sales prices or purchase prices for BOM calculation purposes.

• Item sales prices for BOM calculation purposes − A BOM calculation can calculate a sales price for manufactured items, and a BOM calculation can generate an associated sales price record within the costing version.

• Item purchase prices for BOM calculation purposes − A BOM calculation with planned costs can be based on item purchase price records within the costing version, rather than item cost records. The item purchase price records must be manually entered.

• The item sales price records and purchase price records are only used for BOM calculation purposes.

See alsoAbout costing versions for standard costsAbout costing versions containing item sales prices related to BOM calculationsAbout costing versions containing item purchase prices related to BOM calculations


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About costing versions for standard costs [AX 2012]

Updated: March 22, 2011


Costing versions for standard costs must be assigned to a type of standard cost, and they must allow content to include cost data. A costing version can contain a set of standard cost records about items, cost categories for routing operations, and calculation formulas for indirect costs.

Some restrictions apply to a costing version for standard costs. The following restrictions guarantee adherence to standard costing principles:

• Charges must be included in an item's cost. The charges for a manufactured item represent the amortized constant costs in the bill of materials (BOM) and route information. Therefore, they must be included in the unit cost. The charges for a purchased item are also included in the item's unit cost.

• Calculation of standard costs for manufactured items must be based on the cost records in a costing version for standard costs. Alternative sources of cost data, which are defined by the BOM calculation group, can only be used with a costing version for planned costs, such as purchase price trade agreements for purchased items.

• BOM calculations must be performed in a single-level explosion mode.

The item cost data for standard costs can be copied to another costing version that contains standard costs or planned costs. However, the item cost data for planned costs cannot be copied to a cost version that contains standard costs, because the restrictions that are listed earlier in this topic do not apply to planned costs.

See also






Page 1 of 2About costing versions for standard costs [AX 2012]





About costing versionsMaintaining standard costs in a nonmanufacturing environmentMaintaining standard costs in a manufacturing environment


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About managing standard cost updates [AX 2012]

Updated: January 21, 2011


Updates to standard cost data can be managed by using two different approaches: the one-version approach and the two-version approach.

The one-version approach uses a single costing version that contains all cost records. These records include the original costs and all cost updates.

The two-version approach uses one version that contains records of the original costs and a second version that contains records of all cost updates. A primary advantage of the two-version approach is the clear delineation and tracking of cost updates in a separate costing version, without affecting the original costing version. The two-version approach can be used to identify multiple incremental updates, where each incremental update has a separate costing version that contains the incremental cost records.

Example

The following example illustrates how the one-version and two-version approaches can be used for updating standard costs in a manufacturing environment. For example, updates that reflect new items or error corrections.

Assume that a single costing version represents the standard costs for the current year. The identifier for this version is 2012-STD. Version 2012-STD contains the current active costs for all items. Additionally, it contains all routing-related cost categories and overhead calculation formulas that were known at the start of the year 2012. 2012-STD is the original costing version.

• One-version approach to cost data updates − In the one-version approach, the original costing version 2012-STD contains all cost records. Cost updates are recorded in 2012-STD and are set to a status of ”Pending.” The pending costs can be manually entered for new purchased items, or they can be calculated for a manufactured item to reflect corrections.






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When the one-version approach is used, the BOM calculations do not require a fallback data source because all active costs are contained in the costing version. After the pending costs become active, the original costing version 2012-STD will again contain all the current active costs.

• Two-version approach to cost data updates − The two-version approach requires an additional costing version that contains only the cost updates. The identifier for this version is 2012-STD-CHANGES. Cost updates are recorded in 2012-STD-CHANGES and are set to a status of “Pending.”

With the two-version approach, the BOM calculations of pending costs for manufactured items require a fallback data source. This is because the additional costing version 2012-STD-CHANGES contains only a subset of cost data. The fallback can be expressed as the active costs or as the costing version 2012-STD, because both identify the source of cost data when it is not included in 2012-STD-CHANGES. After the pending costs become active, the costing version 2012-STD-CHANGES will contain the current active costs that reflect the updates, whereas the original costing version 2012-STD will be untouched.

When the two-version approach is used, blocking policies for the original costing version should be set up to prevent updates. Identical blocking policies should be set up for the additional costing version, except for the specified from-date and the selective use of blocking policies to allow for updates. The specified from-date should be updated with each batch of changes to reflect the scheduled activation date.

This example used one additional costing version for managing updates throughout the year 2012. More than one additional costing version can be used, such as a separate version for each batch of updates. When more than one additional costing is used, the fallback must be expressed as the active costs, because the active costs are spread over multiple costing versions.

See alsoAbout BOM calculations that use the fallback principle


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About costing versions containing item purchase prices related to BOM calculations [AX 2012]

Updated: December 13, 2010


A costing version can include content about the purchase price records for an item. You enable purchase price content primarily to define purchase price records for component items, so that these records can be used to calculate the costs of manufactured items. To enable purchase price content, you must define a BOM calculation group that contains a cost price model for the item's purchase price, and then assign the BOM calculation group to purchased items. You must then use a cost price model for the BOM calculation group when you perform BOM calculations with planned costs to calculate the sales price of manufactured items.

An item's purchase price records are also used for reference information. By changing the status of an item's purchase price record from pending to active, you can update the item's base purchase price. The base purchase price is not site-specific, and it can be manually overridden. It acts as a default purchase price on purchase orders.

See alsoAbout BOM calculation of a suggested sales price







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About costing versions containing item sales prices related to BOM calculations [AX 2012]

Updated: June 15, 2011


A costing version can include content about the sales price records for items. The main reason for including content about sales prices is to retain a manufactured item's calculated sales price. The calculated sales price can then be analyzed to determine how components, routing operations, and overhead contribute to the cost and sales price.

A secondary reason for including content about sales prices is to define the sales price records for component items. These records can then be used to calculate the sales price of manufactured items. To use content about sales prices for this purpose, you define the sales price model that is embedded in a bill of material (BOM) calculation group, and then assign the BOM calculation group to purchased items. Then, when you perform BOM calculations with planned costs, you select the cost price model of the BOM calculation group.

Otherwise, the sales price records for items are only used for reference information, regardless of whether the records are manually entered or calculated. By activating an item's sales price record, you can update the item's base sales price. However, the base sales price is not site-specific, and it can be manually overridden. The item's base sales price is used as a default sales price on sales orders and sales quotations.

See alsoAbout BOM calculation of a suggested sales price







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Community Additions

Maintaining standard costs in a nonmanufacturing environment [AX 2012]Updated: October 17, 2012


Nonmanufacturing and distribution environments maintain standard costs for purchased items. The guidelines for maintaining an item's standard costs consist of several scenarios. For example, standard costs can be set for the first time, they can be updated through the frozen period, and they can be periodically updated. The guidelines assume that you complete preparatory steps before you maintain standard costs for purchased items.

See alsoPrepare to maintain standard costs for purchased itemsSet up initial standard costs in a nonmanufacturing environmentUpdate standard costs in a nonmanufacturing environment


© 2017 Microsoft

Page 1 of 1Maintaining standard costs in a nonmanufacturing environment [AX 2012]



Prepare to maintain standard costs for purchased items [AX 2012]



To maintain purchased items' costs, follow these steps:

1. Assign an item model group to each purchased item.

The item model group determines whether the item’s costs reflect a standard cost or an actual cost inventory model.

2. Assign an item group to each purchased item.

The item group contains ledger accounts that apply to the purchased item. The ledger accounts for an item with a standard cost inventory model include the purchase price variance, the inventory cost revaluation, and the cost change variance.

3. Assign a cost group to each purchased item.

The cost group can act as the basis for assigning ledger accounts, such as assigning ledger accounts for purchase price variances.

4. Assign the inventory unit of measure to each item.

The item’s costs are always expressed in the item’s inventory unit of measure.

The purchased items’ costs can be maintained after you complete the preparation steps. Additional preparation steps are necessary when a purchased item will be a component in a manufacturing environment.

See alsoSet up initial standard costs in a nonmanufacturing environmentUpdate standard costs in a nonmanufacturing environmentPrepare to maintain standard costs for purchased items


Set up initial standard costs in a nonmanufacturing environment

Update standard costs in a nonmanufacturing environment

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Set up initial standard costs in a nonmanufacturing environment [AX 2012]



Nonmanufacturing and distribution environments maintain standard costs for purchased items. This includes setting up the standard costs for the first time. The following guidelines assume the use of a single costing version when you set up the standard costs for the first time. This costing version contains standard costs for the current period. Pending cost records for all items are entered in this costing version, and the status is changed to active.

1. Define the costing version in the Costing versions form. Guidelines for this costing version include the following:

◦ Assign a costing type of standard costs.

◦ Assign a meaningful identifier for the costing version, such as 2012-STANDARD.

◦ Ensure that the content includes cost records.

◦ Allow the entry of cost records. Do not block the entry of pending costs.

◦ Allow the entry of cost records for all sites. Assigning a site limits the entry of cost records to the specified site.

◦ Optionally prevent the ability to change the status of item cost records from pending to active. The status change will be enabled after the pending costs have been completely and accurately defined.

◦ Optionally define a from-date. As a general guideline, use a future date that represents the planned cutover date, or the first day in the frozen period if you prepare cost data beforehand.

◦ Indicate a fallback principle of none, because the fallback principle applies to BOM calculations in manufacturing environments.

2. Enter item cost records in the costing version in the Item price form. A separate cost record must be entered for each site that purchases or stocks the item. The cost reflects the standard costs for the period. If a cost is entered incorrectly, change the pending cost for the item. A pending cost can also be deleted.




Page 1 of 2Set up initial standard costs in a nonmanufacturing environment [AX 2012]





3. Verify item cost records in the costing version for completeness and accuracy. Use the Item prices report to review a list of item cost records.

4. Use the Costing version setup form to change the blocking flag to allow the status change of pending cost records.

5. Change the status to active for all pending item cost records in the costing version on the cutover date. Use the Activate prices form to change the status for multiple cost records. You can open the Activate pricesform from the Costing version setup form. The status of individual cost records can be changed in the Item price form by clicking Activate.

6. Use the Costing version setup form to change the blocking flags in the second costing version to prevent additional data maintenance.

Repeat the steps in this procedure for separate costing versions when they contain site-specific costs for a multisite operation.

See alsoUpdate standard costs in a nonmanufacturing environment


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Update standard costs in a nonmanufacturing environment [AX 2012]



Nonmanufacturing and distribution environments maintain standard costs for purchased items. Maintaining standard costs includes updating the standard costs throughout the frozen period. Updates may reflect new items, corrections, or cost changes. The following guidelines assume the use of a two-version approach to updating standard cost. One costing version contains the originally defined standard costs for the frozen period, and the second costing version contains the incremental updates. Each update is entered as a cost record that is enclosed in the second costing version, and eventually it is enabled. An alternative, one-version approach uses the originally defined set of standard costs.

The two-version approach requires the definition of a second costing version. The guidelines for defining this costing version include the following:

• Assign a costing type of standard costs.

• Assign the costing version a meaningful identifier that indicates the contents, such as 2012-UPDATES.

• Ensure that the content includes cost records.

• Allow the entry of cost records for all sites. If you specify a site, you limit the entry of cost records to that site.

• Indicate a fallback principle of none. The fallback principle only applies to cost calculations for manufactured items.

To correct, adjust, or update standard costs for new items, follow these steps:

1. Use the Costing version setup form to enable the entry of cost data into the second costing version. Optionally, prevent the activation of pending costs, so that the activation will be allowed after pending costs have been completely and accurately defined. Optionally, enter a date in the From date field. As a general guideline, use a date that represents when you intend to enable the incremental updates. Alternatively, leave the From date field blank for the costing version, and then enter a date in the From date field for each cost record.




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2. Use the Item price form to enter updates as item cost records that are enclosed in the second costing version.

3. Use the Item prices report to verify the completeness and accuracy of the item cost records that are enclosed in the second costing version.

4. Use the Costing versions form to change the blocking flag to allow the activation of pending cost records that are enclosed in the second costing version.

5. Use the Activate prices form to activate all pending item cost records that are enclosed in the second costing version. You open the Activate prices form from the Costing versions form. You can also enable the pending cost records for individual items by clicking the Activate button in the Item price form.

6. To prevent additional data maintenance, use the Costing version setup form to change the blocking flags that are enclosed in the second costing version. The blocking policies will prevent the entry of new pending costs and the activation of pending costs.

See alsoSet up initial standard costs in a nonmanufacturing environment


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Community Additions

Preparing to maintain standard costs in a manufacturing environment [AX 2012]Updated: October 17, 2012


Information about purchased and manufactured items must be prepared before you maintain the items' standard costs in a manufacturing environment. For example, the cost groups that are assigned to purchased components provide the basis for segmenting the calculated costs of manufactured items, and the BOM calculation group that is assigned to items defines the applicable warning messages that are generated by BOM calculations.

A manufacturing environment that uses routing information requires additional preparation steps in order to maintain standard costs. For example, additional information must be defined for cost categories that are assigned to operations resources and routing operations.

See alsoAbout cost groupsAbout BOM calculation groupsPrepare to maintain standard costs for manufactured itemsAbout manufacturing overheads based on material


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Page 1 of 1Preparing to maintain standard costs in a manufacturing environment [AX 2012]



About cost groups [AX 2012]

Updated: February 20, 2014


Cost groups provide the basis for segmenting and analyzing cost contributions in a manufactured item’s calculated cost, such as the cost contributions for material, labor, and overhead. Cost group segmentation has several synonyms within manufacturing environments, such as cost breakdown, cost decomposition, or cost classification.

Cost group segmentation can serve several purposes, such as the following:

• Segment costs for different types of material, such as ingredients and packaging material for a canned goods product, based on the cost groups that are assigned to items.

• Segment costs for different types of operations resources, such as different types of labor or machines, based on the cost groups that are assigned to cost categories related to operations resources and routing operations.

• Segment costs for setup and run time in routing operations, based on the cost groups that are assigned to cost categories related to the routing operations.

• Segment costs for different types of overheads, such as labor-related and machine-related overheads, based on cost groups that are assigned to indirect costs in the costing sheet setup.

• Act as the basis for calculating various manufacturing overheads in the costing sheet setup. This can include different overheads related to routing information about operations resources or about setup and run time. Manufacturing overheads can also be related to cost contributions of component material, reflecting a lean manufacturing philosophy that eliminates the need for routing information.

Cost group segmentation applies to a manufactured item’s calculated cost whether it was based on standard costs or planned costs. The Summary form displays this segmentation by cost group or by level or by both.

The ability to retain cost group segmentation across multiple levels in a product structure only applies to manufactured items that use a standard cost inventory model. The term splitting refers to this ability to retain cost group segmentation across multiple levels. Without splitting, the cost for a manufactured component is treated as a material cost contribution. The inventory parameter for cost breakdown by subledger indicates that cost group

About cost groups


About manufacturing overheads based on material


Other Versions

Page 1 of 3About cost groups [AX 2012]



segmentation will be retained across multiple levels in standard cost calculations. Whereas a policy of no levels means that cost group segmentation only applies to a single level calculation. The Cost rollup by cost group form, for example, displays the cost group segmentation across multiple levels for standard cost items.

Cost group segmentation can also apply to variances for a standard cost item. A second inventory parameter defines whether variances will be identified by cost group, or just summarized.

A cost group can be assigned a cost group type and a behavior for supplemental segmentation purposes.

• Cost group type − Each cost group must be assigned a cost group type, which designates it as pertaining to direct material, direct manufacturing, direct outsourcing, indirect or undefined. A cost group designated as direct material can be assigned to items. A direct manufacturing cost group can be assigned to cost categories. A direct outsourcing cost group can be assigned to a product type of service, which enables you to classify costs associated with the service purchase to subcontracting activities. An indirect cost group can be assigned to indirect costs for surcharges or rates. A cost group designated as undefined can be assigned to items, cost categories or indirect costs.

The assignment of a cost group type serves several purposes. First, it constrains the ability to assign a cost group and to view a drop-down list of applicable cost groups. Second, it provides supplemental segmentation for reporting purposes. Third, it can be used to assign ledger accounts for variances.

• Behavior − Each cost group can optionally be assigned a behavior, which designates the cost group as pertaining to fixed costs or variable costs. A cost group that has a null value for behavior is treated as a variable cost. The assignment of a behavior only serves a reporting purpose. For example, costs can be displayed with segmentation of fixed and variable costs on the costing sheet, and in the Cost rollup by cost group form.

If you assign a profit-setting percentage to each cost group, the BOM calculation provides a suggested sales price based on a cost-plus-markup approach.

See alsoAbout BOM calculationsAbout BOM calculation of a suggested sales price






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About BOM calculation groups [AX 2012]

Updated: May 27, 2011


One purpose of assigning a BOM calculation group to items is to define applicable warning conditions so that a BOM calculation generates warning messages about potential sources of calculation errors. A BOM calculation generates an Infolog that contains the warning messages. You can view this warning Infolog about a selected item when you use the Complete form to review BOM calculation results. The form displays an icon that indicates that a warning Infolog exists for an item.

Two warning conditions only apply to manufactured items, and four warning conditions apply to any item.

• Identify when a manufactured item does not have an active BOM.

• Identify when a manufactured item does not have an active route.

• Identify a warning when the item in a BOM line has a 0 (zero) quantity.

• Identify a warning when the item in a BOM line has a 0 (zero) cost or when it does not have a cost record.

• Identify a warning when the item in a BOM line has an out-of-date cost. The warning reflects a comparison of the calculation date to the specified days for a maximum age of cost.

• Identify a warning when the item in a BOM line has less than the profitability percentage that you want.

The definition of various BOM calculation groups depends on the need for variations in applicable warning messages. For example, one BOM calculation group may be sufficient, with warning conditions about an active BOM, a zero component quantity, and a zero component cost.

The applicable warning conditions that are associated with the BOM calculation group can be optionally overridden when you initiate a BOM calculation. You can add or remove an applicable warning condition. For example, you could remove the applicable warning condition about an active route when the specific situation does not involve routing data.

The assignment of a BOM calculation group to items can serve other special purposes. The special purposes include the following:

About cost groups




Page 1 of 3About BOM calculation groups [AX 2012]



• Indicate the source of a purchased component’s cost contribution data in calculating the planned cost of a manufactured item (by using the cost price model field). Some manufacturers calculate planned costs by using the purchase price trade agreements for purchased components or another basis, such as the purchase price records in a costing version. The approach that you want is termed the cost price model. The decision about the source of cost data should be reflected in the definition and assignment of BOM calculation groups.

• Indicate how the item’s data will be used to calculate a suggested sales price. This is done in the sales price model field. Some manufacturers want to calculate a suggested sales price for manufactured items. The calculated sales price can reflect a rolled-price approach that is based on the component’s sales price record. It could also be a cost-plus-markup approach that is based on the component’s cost and applicable profit percentage. This is associated with the item’s cost group.. The approach that you want is termed the sales price model, with a choice between item sales price and cost group. The decision about a rolled-price versus cost-plus-markup approach should be reflected in the definition and assignment of BOM calculation groups.

• Indicate that a manufactured item should be treated as a purchased item for BOM calculation purposes by using the stop explosion field. A manufactured item can be treated as a purchased item for cost-rollup purposes. The typical situations include a purchased item that is occasionally manufactured or a manufactured item that is now being purchased. The item will first be designated as a manufactured item to define BOM and route information, and to support production orders for the item. However, the stop explosion flag prevents cost calculations from using the item’s BOM and route, and the BOM calculation uses the item’s specified costs.

Note

The Time and attendance module contains the Calculation groups form, but that form has no relationship to BOM calculation groups. In Time and attendance, workers can be assigned to calculation groups which reflect the grouping of workers associated with the same supervisor or manager. Calculation of workers’ registrations can be done automatically or manually by a supervisor or manager.

See alsoAbout BOM calculationsAbout manufactured items that are treated as purchased itemsAbout BOM calculation of a suggested sales price






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About manufacturing overheads based on material [AX 2012]



A manufacturing environment that has only bills of material (BOM) information and no routing information can calculate manufacturing overheads that are based on material. The manufacturing overheads are expressed as indirect cost-calculation formulas for a surcharge percentage, and they are defined in the Costing sheet setup form. A cost group that is assigned to material components acts as the basis for a calculation formula. The calculation formulas can be defined for individual products or for item groups that are assigned to products, to provide more flexibility in calculating manufacturing overheads that are based on material.

See alsoAbout costing sheet setupExample of a costing sheet setup


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Page 2 of 2About manufacturing overheads based on material [AX 2012]



Prepare to maintain standard costs for manufactured items [AX 2012]



The preparation steps for maintaining costs for manufactured item are slightly different than for purchased items. Policies assigned to manufactured items can affect the cost calculations for their parent manufactured items. To prepare for maintaining costs for manufactured items, follow these steps:

1. Assign an item model group to the manufactured item.

The item model group identifies the use of standard costs.

2. Assign an item group to the manufactured item.

The item group contains ledger accounts that apply to the manufactured item. The ledger accounts for a manufactured item with a standard cost inventory model include several production variances, the cost change variance, and inventory cost revaluation.

3. Assign the inventory unit of measure to the item.

The item’s costs are always expressed in the item’s inventory unit of measure.

4. Do not assign a cost group to the manufactured item unless it will be treated as a purchased item.

5. Assign a BOM calculation group to the manufactured item.

The item’s BOM calculation group defines applicable warning conditions so that performing a BOM calculation will generate warning messages about possible sources of calculation errors. For example, a warning message can identify when an active BOM or route does not exist.

The BOM calculation group contains a stop explosion policy that indicates when to treat a manufactured item as a purchased item.

6. Assign a standard order quantity to the manufactured item when it has constant costs.

About cost groups




Page 1 of 2Prepare to maintain standard costs for manufactured items [AX 2012]





The standard order quantity is an accounting lot size for amortizing constant costs. For example, setup times in routing operations or a constant component quantity in the bill of material.

7. Define the BOM for the manufactured item. One or more BOM versions can be defined for the manufactured item. Verify that the versions that you want have been marked as approved and active and that they have the effective dates that you want. The BOM version can be company-wide or site-specific.

8. Define the routing for the manufactured item. One or more route versions can be defined for the manufactured item. Verify that the versions that you want have been marked as approved and active and that they have the effective dates that you want. The route version must be site-specific.

The use of routing information for costing purposes will require additional preparation steps. For example, the cost categories that are assigned to routing operations must be correct and completed.

See alsoAbout BOM calculation groupsAbout manufactured items that are treated as purchased itemsAbout amortizing constant costs for a manufactured itemAbout displaying charges for a manufactured item


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Community Additions

Preparing to maintain standard costs in a manufacturing environment with routings [AX 2012]Updated: May 19, 2011


The topics in this section contain information about how to prepare to maintain standard costs in a manufacturing environment where routings are used.


About costing sheet setup

About cost categories used in Production control and in Project management and accounting



© 2017 Microsoft

Page 1 of 1Preparing to maintain standard costs in a manufacturing environment with routings [AX 2...



About cost categories used in production routings [AX 2012]



Cost categories apply to manufacturing environments that use routings. Cost categories are assigned to operations resources and routing operations to define hourly costs and segment cost contributions in a manufactured item’s calculated costs. That is, the cost groups that are assigned to cost categories classify manufacturing cost contributions by operation resources and type of activity, such as setup and run time. The specificity of cost group assignment provides the foundation for calculating manufacturing overheads based on routing information.

Note

Cost categories have several synonyms within manufacturing environments, such as labor rate codes or machine rate codes.

Each cost category has its associated cost records and an assigned cost group. Different cost categories are needed to support different production purposes.

• Assign different hourly costs by operations resource, such as different costs for various types of labor skills, machines, or manufacturing cells.

• Assign different hourly costs for the setup time or run time that is associated with a routing operation.

• Assign operations resource costs on the basis of output quantity rather than hourly costs, such as the piece rates for paying labor.

• Provide cost group segmentation of cost contributions to a manufactured item’s calculated cost, such as segmentation of labor and machine costs.

• Provide the cost group basis for overhead calculation formulas, such as labor-related and machine-related overheads or overheads that are related to setup and run time.





Page 1 of 3About cost categories used in production routings [AX 2012]




A cost category can be assigned to the setup time, process time, and the quantity for a routing operation. When costs or cost group segmentation differ between setup and process time, for example, different cost categories should be defined and assigned to them. The selective usage of cost categories for setup time, process time, and quantity is determined by the route group that is assigned to an operation. Assignment of cost categories to time and quantity can be mandated based on the company-wide policies that are embedded within the Production parameters form.

Each cost category has its associated costs that are based on the definition of cost records within a costing version. Use the Cost category price form to define the cost records for a specified costing version and site. The cost record for a cost category is initially entered with a pending status and an intended effective date. Activating the cost record updates the status (to current active) and the effective date (to the activation date). Different cost records may reflect different sites, effective dates, or status. Bills of material (BOM) calculations for a future or historical date will use cost records that have the relevant effective date. The current active cost record will be used for estimating production order costs and valuing reported time against a production order.

The cost record for a cost category can be site-specific or company-wide. The cost record will be site-specific if you assign a site to it. Otherwise, a blank value means that the cost record will apply to all sites within the company. Costs may differ between sites, for example, so that the cost records must be defined as site-specific.

A routing operation generally inherits the cost categories that are assigned to the operations resource or master operation. When a production order is created, the routing operations in the production route reflect the selected route version. You can override the cost categories that are assigned to the operations in the production route.

Certain types of production work may apply to project time estimates and reporting, which requires a cost category that can be used for production and project purposes. Additional project-related information must be defined when a cost category is flagged for use in projects.

See alsoAbout cost groupsAbout cost categories used in Production control and in Project management and accounting


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About costing sheet setup [AX 2012]

Updated: February 4, 2014


Setting up the costing sheet involves two objectives. As the first objective, you define the format for displaying cost of goods sold information about a manufactured item or production order. The formatted display is termed a costing sheet. As the second objective, you define the basis for calculating indirect costs. The costing sheet setup builds on the cost group feature for displaying information and for the indirect cost calculation formulas. The two objectives of costing sheet setup are as follows:

• Define the format for the costing sheet. The user-defined format for a costing sheet identifies the segmentation of costs that contain a manufactured item’s cost of goods sold. The item’s cost of goods sold information, for example, could be segmented into material, labor, and overhead based on cost groups. These cost groups are assigned to items, cost categories for routing operations, and indirect cost calculation formulas. The format for the costing sheet typically requires intermediate totals when multiple cost groups have been defined, such as aggregating multiple cost groups pertaining to material. The definition of a costing sheet format is optional, but a costing sheet format must be defined if indirect costs will be calculated.

• Define the basis for calculating indirect costs. Indirect costs reflect manufacturing overheads that are associated with producing a manufactured item. An indirect cost calculation formula can be expressed as a surcharge or a rate. A surcharge represents a percentage of value, whereas a rate represents an amount per hour for a routing operation. A cost group defines the basis for the calculation formula. For example such as a 100 percent surcharge for a labor cost group or a USD 50.00 hourly rate for a machine cost group. In order to define a calculation formula and its cost group basis, the costing sheet setup requires the identification of the cost group that represents the overhead and the selection of a surcharge or rate approach.

Each calculation formula must be entered as a cost record. The cost record consists of a specified costing version, a surcharge percentage, or a rate amount, the cost group basis, a status, and an effective date. A cost record is initially entered with a pending status and effective date. Activating the cost record updates the status (to current active) and the effective date (to the activation date). The cost record can also specify a site for a site-specific calculation formula, or indicate a company-wide calculation formula by leaving the site field blank. The cost record can optionally consist of a specified item or item group when the calculation formula has been flagged as per item.





Page 1 of 2About costing sheet setup [AX 2012]





The current active cost records for indirect cost calculation formulas will be used for estimating production order costs. They will also be used for calculating actual costs that are related to actual consumption of time and material. The pending cost records will be used in BOM calculations for a future date.

Two blocking policies for a costing version determine whether pending costs can be maintained and whether the pending cost can be started. Use the blocking policies to permit data maintenance, and then to prevent data maintenance for the cost data in a costing version.

After you define the costing sheet format and calculations for indirect costs, you must initiate a separate step to validate and save the information. The costing sheet represents a company-wide format for consistently displaying the costs of goods sold information.

The costing sheet is displayed as part of the Calculate item cost form. The costing sheet can be displayed for a manufactured item’s calculated cost record in the Item price form, or for an order-specific calculation record in the BOM calculation results form. It can also be displayed as part of the Price calculation form for a production order.

Set up a costing sheet• Click Inventory management > Setup > Costing > Costing sheets.

See alsoAbout cost groupsExample of a costing sheet setup


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About cost categories used in Production control and in Project management and accounting [AX 2012]



Certain types of production work can apply to project time estimates and reporting, which requires a cost category for production and project purposes. Additional project-related information must be defined when a cost category is used in production and projects. For example, the hourly costs that are associated with projects can be different from the hourly costs that are associated with production. A cost category that is used in Production and Project can be defined in the Cost categories form.

Note

Cost accounting contains a Project categories form, but it has no relationship to the functionality that is described in this topic.

When you select to use a cost category in projects, the Cost categories form displays additional project-related information. Additional tabs include project-related information, such as the assignment of a category group, a line property, and ledger accounts. The cost category must be assigned to a category group that supports a transaction type of hours. A line property indicates the default about how reported time is chargeable to a project. The ledger accounts that are related to costs and sales typically are defined for the category group that is assigned to the cost category. However, specific accounts can be defined for an individual cost category.

Additional buttons provide access to project-related information about a selected cost category. For example, you can view project-related transactions, define employees or projects, define hourly costs and sales prices, and view reports.

See alsoAbout cost categories used in production routings





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Microsoft Dynamics®

AX 2009

BOM calculations using

costing sheets

White Paper

This document describes how to set up a costing sheet that includes material and manufacturing, and how the setup affects the BOM calculation results.

June 2012

http://www.microsoft.com/dynamics/ax

http://www.microsoft.com/dynamics/ax

2 BOM CALCULATIONS USING COSTING SHEETS

Table of Contents

Purpose ....................................................................................................... 4

Introduction ................................................................................................ 4 The costing sheet and indirect costs ........................................................................................ 5

Cost groups ................................................................................................. 5 Cost group types ............................................................................................................... 5 Cost group behavior ........................................................................................................... 6 Create cost groups ............................................................................................................. 6 Assign a cost group to an item ............................................................................................ 6 Assign a cost group to a cost category.................................................................................. 7 Assign cost categories to operations on a production route ..................................................... 7

Costing version ........................................................................................... 8 Costing version types ......................................................................................................... 8 Cost price model ................................................................................................................ 8 Explosion mode ................................................................................................................. 8 Create and set up a costing version ..................................................................................... 8

Cost groups and costing versions ................................................................ 9 Set up standard cost prices for items through a costing version .................................................. 9 Set up standard cost prices for cost categories through a costing version ....................................10

Costing sheet ............................................................................................ 10 Create a Price node in the costing sheet .............................................................................. 11 Create a Total node or a Cost group node in the costing sheet ................................................ 11 Create a Rate node or a Surcharge node in the costing sheet ................................................. 13

Single-level and multilevel BOM calculation .............................................. 13 Costing sheet setup..............................................................................................................13 Calculate a BOM by using Single level explosion ......................................................................13

View the calculated cost of the single-level BOM ................................................................... 14 View the origin of the values in the single-level BOM calculation ............................................. 15 View the costs according to the format created in the costing sheet setup ............................... 15

Calculate a BOM by using Multilevel explosion .........................................................................16 View the calculated cost of the multilevel BOM ..................................................................... 16 View the origin of the values in the multilevel BOM calculation ............................................... 17 View the costs according to the format created in the costing sheet setup ............................... 17

Indirect costs ............................................................................................ 18 Create an indirect cost node in the costing sheet setup ......................................................... 19 Create and set up a surcharge node .................................................................................... 20 Create and set up a rate node ............................................................................................ 21

Surcharge calculation and subtype behavior ............................................. 22 Set up surcharges ............................................................................................................. 22 Calculate surcharges by using the Level subtype................................................................... 23 View the surcharge records upon BOM calculation by using the Level subtype .......................... 24

3

BOM CALCULATIONS USING COSTING SHEETS

View the indirect costs upon BOM calculation by using the Level subtype ................................. 24 Calculate surcharges by using the Total subtype ................................................................... 25 View the indirect costs upon BOM calculation by using the Total subtype ................................. 26 Calculate surcharges by using the Sublevel subtype .............................................................. 26 View the indirect costs upon BOM calculation using the Sublevel subtype ................................. 27

Rate calculation and subtype behavior ...................................................... 28 Set up rates ..................................................................................................................... 28 Calculate rates by using the Process subtype ....................................................................... 29 View the rate records upon BOM calculation by using the Process subtype ............................... 30 Calculate rates by using the Setup subtype .......................................................................... 31 View the rate records upon BOM calculation by using the Setup subtype .................................. 31

Surcharge calculation by using the Per item parameter ............................ 32 Calculate surcharges by using the Per item parameter ........................................................... 32 View overhead per item upon BOM calculation by using the Per item parameter ....................... 33

Indirect cost calculation viewed from a production order ......................... 33 Set up the costing sheet .................................................................................................... 34 Perform a BOM calculation and associate the cost with a costing version.................................. 34 Create adjustment lines ..................................................................................................... 35 Create and process a production order ................................................................................ 36 View the results of a BOM calculation from a production order ................................................ 36 Update a production order by using automatic BOM calculation .............................................. 38 View the results of a BOM calculation from a production order by using automatic BOM consumption .................................................................................................................... 38

Production variances ................................................................................ 40 Production variances and the difference between actual costs and calculated costs ................... 41 Analyze the production variances ........................................................................................ 41


Purpose

The purpose of this document is to describe how Microsoft Dynamics AX 2009 supports absorption costing by allowing indirect costs to be absorbed into the product cost.

Introduction

Absorption costing is one of many cost accounting methods. The purpose of applying absorption costing is to ensure that indirect costs that originate in the manufacture of finished goods are recognized and absorbed into the product cost.

Classifying resources of the material and labor types into cost groups of the Direct materials or

Direct manufacturing type lets cost controllers configure a cost composition with the level that is required for financial reporting and internal analysis. The aggregation also serves as the basis for

calculating absorption of indirect cost.

Inventory is evaluated by:

Standard cost – The cost composition can be tracked in Microsoft Dynamics AX 2009, and the inventory value of a product can be reported by its cost composition.

Use the Standard cost inventory value report for reporting.

Use the Sub ledger option in the Cost breakdown field on the Bill of materials tab under Inventory management > Setup > Parameters.

Actual cost (FIFO, LIFO, or Weighted average) – The cost composition cannot be tracked in Microsoft Dynamics AX 2009, and the inventory value can only be reported as Direct material.

Absorption of indirect cost is important for ensuring accurate product costing and valuation of

inventory. In some industries, indirect cost represents a significant portion of the product cost.

Accounting standards or Generally Accepted Accounting Principles (GAAP) may recommend or require that indirect cost be absorbed.

Examples of indirect cost include:

Depreciations of manufacturing equipment.

Maintenance expenses related to manufacturing equipment.

Shop floor expenses for cleaning, rent, or insurance.

5


The costing sheet and indirect costs

The following illustration shows a costing sheet structure, and it also shows how indirect cost is posted to accounts in the general ledger.

Note: All examples in this document use a Microsoft Dynamics AX 2009 SP1 RU7 environment with

Contoso demo data (company CEU).

Cost groups

Cost groups represent the lowest level of a cost composition. A cost group must be associated with a cost group type, which defines the nature of cost classification in Microsoft Dynamics AX 2009.

Cost group types

There are four types of cost groups:

Direct materials – Can be assigned to items.

Direct manufacturing – Can be assigned to cost categories.

Indirect cost – Can be assigned to indirect costs for surcharges or rates

Undefined – Not specific to anything. This cost group type is automatically assigned to cost groups during upgrade to Microsoft Dynamics AX 2009 from earlier versions of Microsoft Dynamics AX

At least one cost group of each cost group type must be set as the default type. If a resource is not assigned a cost group, the system automatically assigns the default cost group. You are not notified

about automatic cost group assignment.


Cost group behavior

A cost group can be defined as Fixed or Variable, depending on the resources that it represents in the cost composition. This is referred to as the behavior of the cost group. The distinction is purely for

reporting purposes, and it applies only when you use the Standard cost inventory value report and the Standard cost method for reporting.

Create cost groups

Click Inventory management > Setup > Bill of materials > Cost groups.

Cost groups are assigned to items and cost categories, and the cost categories are assigned to operations on production routes. In this way, the operations are associated with cost groups.

Assign a cost group to an item

Click Inventory management > Item details.

Note: As the preceding illustration shows, only cost groups of the Direct materials and Undefined

types are applied.

7


Assign a cost group to a cost category

Click Production > Setup > Routes > Cost categories.

Note: As the preceding illustration shows, only cost groups of the Direct manufacturing and Undefined types are applied.

Assign cost categories to operations on a production route

1. Click Production > Route details > Route.

2. Click the Setup tab, and then, under Cost categories, select the cost categories.


Costing version

The primary purpose of a costing version is to contain cost records for items and cost categories. The costing version determines current active costs and the way that the bill of materials (BOM) calculation simulation is performed.

Costing version types

There are two types of costing versions:

Standard cost – Used for items that are associated with an inventory model group of the Standard cost type. Use this costing version type to set up costs and calculate current active cost.

Note: This inventory model group supports calculation of costs only at a single level.

Planned cost – Used for items that are associated with inventory model groups of types other than Standard cost, such as FIFO and LIFO. Use this costing version type to run different

scenarios according to the setup for cost simulations.

Cost price model

In a costing version, you can select one of the following values as the cost price model:

Version cost price – The cost is taken from the current costing version for items, categories, and indirect costs. This is the only available option for costing versions of the Standard cost type.

Tip: Pending costs are always applied in calculations. If no pending costs exist for the current

costing version, the cost value is determined from the fallback principle that is selected for the costing version. For more information, see “Create and set up a costing version.”

Calculation group – The cost is based on the calculation group for the items.

Set up calculation groups under Inventory Management > Setup > Bill of materials.

Assign the calculation group to component items on the References tab under Inventory management > Item details.

Explosion mode

The explosion mode in a costing version determines how the levels in a BOM affect the cost calculation. You can select one of the following explosion modes:

Multilevel – The calculated cost reflects a complete recalculation. Each sub-BOM is calculated instead of just taking its current cost.

Make to order – Resembles Multilevel (a complete recalculation), except the specified quantity

is used to amortize constant costs.

According to BOM line type – The calculation depends on the BOM line type. For example, if the type is Item, the current cost is taken, and if the type is Production, the cost is calculated.

Single level – The standard costing version is restricted to a single level. This ensures accurate and consistent calculation of standard costs. For this explosion mode, the calculated costs of first-level manufactured components are applied.

Create and set up a costing version

1. Click Inventory management > Setup > Costing versions.

2. To set up a cost price model and an explosion mode, click the Calculation tab.

9


3. To specify the date when the costing version becomes valid, click the Recording tab. Then, in the From date field, enter a date.

Note: In the Fallback principle field on the Calculation tab, you can define the cost value that is applied if no cost value is retrieved for the current costing version.

Cost groups and costing versions

You associate the cost groups of items and operations with a costing version by setting up a standard cost price for the item or for the cost category of the operation.

For example, you have a BOM item that is composed of two raw material items and a partially finished product. The BOM and the sub-BOM have a route with one operation. All items are associated with an inventory model of the Standard cost type.

To set up standard cost prices for the components of the BOM item, you add standard cost prices to the items and to the cost categories of the routes that are associated with the BOMs.

Set up standard cost prices for items through a costing version

1. Click Inventory management > Item details.


2. Select an item, click Price, and then create a pending price of the Cost type.

3. In the Version field, select a costing version, and in the Price field, enter a price.

4. Save the record, and then click Activate.

Set up standard cost prices for cost categories through a costing

version

1. Click Production > Setup > Routes > Cost categories.

2. Create a new category, and then, in the Cost group field, select a cost group.

3. Click Price, and then, in the Version field, select a costing version.

4. In the Price field, enter a price, and then click Activate.

Costing sheet

The costing sheet defines the format for displaying the cost information of a manufactured item and the elements to be included in the calculation of manufacturing overhead.

Each level in the costing sheet consists of a node that is composed of totals and subtotals. The totals and subtotals are based on the cost group list. There are three types of nodes:

Root nodes

Parent nodes of the Price type

Child nodes of the Cost group and Total types

Nodes of the Total type are used for grouping and for subtotal amounts. Total nodes can contain

subtotals or Cost group nodes.

11


A node of the Cost group type that is associated with an indirect cost group must be calculated. To nodes of this type, you can add subnodes of the Surcharge and Rate types, and define surcharge percentages and rate amounts.

Create a Price node in the costing sheet

1. Click Inventory management > Setup > Bill of materials > Costing sheet setup.

2. Right-click the Root node, and then click Create. From the Root node, you can create only nodes of the Price type.

3. In the Code field, enter a code, and in the Description field, enter a description.

4. In the Type field, select Cost price.

5. To display a header line for the node, select the Header check box. To display a total line, select

the Total check box.

Create a Total node or a Cost group node in the costing sheet

1. Right-click the Price node, and then click Create.

2. In the Select node type field, select the node type. In a Price node, you can include a Total node or a Cost group node.


3. On the Edit tab, in the Code field, enter a code, and in the Description field, enter a description. If you want to view a header line and a total line for the node, select the Header and Total check boxes.

For a node of the Total type, you can add another node of the Total type (a subtotal) or a

node of the Cost group type.

For a node of the Cost group type, you can add nodes of the Total and Cost group types. You can also associate the node with a cost group for direct materials or indirect costs. In the

Cost group field, select the cost group that is related to the node. This node will cumulate amounts for the cost group.

13


Create a Rate node or a Surcharge node in the costing sheet

1. Right-click a node of the Cost group type that is associated with an indirect cost group, and then click Create.

2. In the Select node type field, select Rate or Surcharge. The type of node that you create depends on the method to be used to calculate indirect costs.

For more information, see “Surcharge calculation and subtype behavior” and “Rate calculation and subtype behavior.”

Single-level and multilevel BOM calculation

The following examples show the results of BOM calculations when the Single level and Multilevel explosion modes are used. The explosion mode is defined in the Costing version setup form, and the format of the cost information is defined in the Costing sheet setup form.

Costing sheet setup

The cost classification is divided into two nodes of the Total type:

Material cost – Includes all cost groups related to raw material.

Manufacturing – Includes all cost groups related to cost categories in the production operations.

Calculate a BOM by using Single level explosion

1. Click Inventory management > Item details.

2. Select an item of the BOM type, and then click Price.


3. In the Item price form, click Calculation.

4. Select a costing version that uses the Single level explosion mode, and then click Yes to insert the active version of the BOM and the route.

View the calculated cost of the single-level BOM

On the Pending prices tab in the Item price form, you can see that the calculated cost amount is

50:

Price field: The variable costs are 45.

Price misc. charges field: The constant cost is 5.

15


View the origin of the values in the single-level BOM calculation

On the Tree structure tab in the Item price form, you can trace the values of the BOM calculation:

10 is derived from ItemA, 10 from ItemB, and 10 from BOM2. The cost is derived from the cost of

this subproduct, but it is not calculated, because the calculation is set up to be performed at a single level.

5 is derived from the setup time, which is a constant cost, and 15 is derived from the run-time operation.

View the costs according to the format created in the costing sheet setup

On the Costing sheet tab in the Item price form, you can view the format of the costs according to the costing sheet format:

A header and a total for the total cost of 30 that is derived from raw material. The cost is divided

by cost group type, where ItemA and ItemB belong to the HESMat cost group, and BOM2 belongs to the Matl cost group.

A header and a total for the manufacturing cost, where only one cost group shows cost.


Calculate a BOM by using Multilevel explosion

1. Follow steps 1 through 3 of the procedure for a single-level BOM calculation.

2. Select a costing version that uses the Multilevel explosion mode, and then click Yes to insert the active version of the BOM and the route.

View the calculated cost of the multilevel BOM

On the Pending prices tab in the Item price form, you can see that the calculated cost amount is 85:

Price field: The variable costs are 80.

Price misc. charges field: The constant cost is 5.

17


View the origin of the values in the multilevel BOM calculation

On the Tree structure tab in the Item price form, you can view the following costs. The cost of BOM2 is 45, compared to 10 in the single-level calculation. The reason for the difference is that the

cost has been calculated, and raw material and route operations are included in the calculation.

View the costs according to the format created in the costing sheet setup

On the Costing sheet tab in the Item price form, you can view the format of the costs according to

the costing sheet format:

In the Level field, select Single. The cost for the Matl cost group is 45, compared to 10 in the single-level calculation. The Matl cost group is associated with BOM2.


In the Level field, select Multi. The costs are classified according to the composition of BOM2, where 10 is derived from the Matl cost group, and 35 is derived from the manufacturing cost group named Lab_HE.

Indirect costs

There are two types of indirect costs:

Surcharge – A surcharge is an indirect cost based on a percentage that is applied over raw

material or operational processes.

Rate – A rate is an indirect cost calculated as a constant amount that is added to the operational process.

19


Create an indirect cost node in the costing sheet setup

To calculate indirect costs, you must add a formula in the costing sheet setup.

1. Click Inventory management > Setup > Bill of materials > Costing sheet setup.

2. Right-click the price node, which is named COGM - Cost of good manufactured in the following illustration, and then click Create.

3. In the Select node type field, select Total, and then click OK.

4. Select the Header and Total check boxes.

5. Right-click an indirect cost node, and then click Create.


6. In the Select node type field, select Cost group, and then click OK.

A cost node for indirect costs is created. In the preceding illustration, the indirect cost node is associated with the Var_OVH cost group for indirect costs.

This node will cumulate the amounts that are calculated for indirect costs.

Create and set up a surcharge node

1. Right-click a cost group node for indirect costs, and then click Create.

2. Select Surcharge, and then click OK.

3. Complete the remaining options:

General tab

In the Subtype field, select one of the following options:

Undefined – Applies only if your costing sheet is in a draft mode. This value has to be set

to avoid errors when you validate or save the costing sheet.

Level – The calculation is performed at each level individually.

Sublevel – The calculation is performed at the second level and all lower levels.

Total – The calculation is performed at each level, and the sums are cumulated.

If you select the Per item check box, you can indicate which manufactured items the

overhead is calculated for. This applies only to BOM items, and totals are calculated for the BOMs that you select.

Calculation tab

Under Basis, select the material or manufacturing nodes (cost totals or subtotals) for which you want to apply the surcharge.

Under Surcharge, enter the formula that is linked to a costing version.

21


Posting tab

Set up accounts for the production accounting process. When you start a production order, indirect costs are posted to two WIP accounts: WIP issue and WIP account. When you end a production

order, these accounts are cleared, and the final indirect absorption is posted to the Indirect absorption and Indirect absorption offset accounts.

Dimension tab

The dimensions that you select are set in the indirect cost postings. If you leave the dimensions blank, the production order dimensions are applied.

Create and set up a rate node

1. Right-click a cost group node for indirect costs, and then click Create.

2. Select Rate, and then click OK.

3. Complete the remaining options:

General tab

In the Subtype field, select one of the following options:

Undefined – Applies only if your costing sheet is in a draft mode. This value has to be set to avoid errors when you validate or save the costing sheet.

Process, Setup and Quantity – The overhead applies to the total cost of the operation type that you select.

Per item: See the guidelines in the procedure for the surcharge node.

Calculation tab

Under Basis, select the manufacturing nodes (cost totals or subtotals) for which you want to

apply the rate.

Under Rate, enter the formula linked to a costing version. To enter different amounts per site or use different costing versions, for example, you can create an optional number of lines.

Posting tab

See the guidelines in the procedure for the surcharge node.

Dimension tab

See the guidelines in the procedure for the surcharge node.


Surcharge calculation and subtype behavior

The following examples show how the values in the Subtype field in the Costing sheet setup form affect the results of surcharge calculation. The calculation is based on the following setup in the Costing sheet setup form.

Set up surcharges

1. In the Costing sheet setup form, on the Calculation tab, in the Code field, select the node on

which you want to calculate the surcharge.

In the following examples, the surcharge percentage is applied to the Matl node amount.

2. In the Surcharge section, select a costing version, and in the Percent field, enter a percentage.

In the following examples, the percentage is 10.

23


Calculate surcharges by using the Level subtype

1. In the Costing sheet setup form, on the General tab, in the Subtype field, select Level.

2. In the Item details form, on the General tab, in the Cost group field, select the cost group.

3. In the Item details form, select an item of the BOM type, click Price, and then click Calculation.

4. In the BOM calculation for an item form, in the Costing version field, select a costing version

of the Planned cost type.

Note: Use the Planned cost costing version to see the effects of using the Level subtype. The Standard cost costing version is restricted to single-level calculation.

5. Click OK. The following cost price is calculated:

Price field: 82

Price misc. charges field: 5

6. Click Complete.


View the surcharge records upon BOM calculation by using the Level subtype

The two new surcharge records can be identified by the surcharge icons.

View the indirect costs upon BOM calculation by using the Level subtype

Note that there is an indirect cost per level. In this example, ItemA and ItemC belong to a cost group for direct material. (The cost group is named Matl in the illustrations.) Each item represents a cost of 10, so 10 percent is 1 per level.

25


Calculate surcharges by using the Total subtype

1. In the Costing sheet setup form, on the General tab, in the Subtype field, select Total.

2. Follow the steps 2 through 5 of the procedure for calculation that uses the Level subtype.

The following cost price is calculated:

Price field: 83


3. Click Complete.


View the indirect costs upon BOM calculation by using the Total subtype

An indirect cost has been calculated per level. ItemA and ItemC belong to the cost group named Matl in the illustration. However, because the subtype is Total, the cost is cumulated in upper levels:

Level 2: Total cost of Matl = 10, surcharge = 10 percent, surcharge amount = 1

Level 1: Total cost of Matl for Levels 2 and 1 = 20, surcharge = 10 percent, surcharge amount = 2

Calculate surcharges by using the Sublevel subtype

1. In the Costing sheet setup form, on the General tab, in the Subtype field, select Sublevel.

27


2. Follow steps 2 through 5 of the procedure for calculation that uses the Level subtype.

The following cost price is calculated:

Price field: 81


3. Click Complete.

View the indirect costs upon BOM calculation using the Sublevel subtype

Although the surcharge record is added in the top level (Level 1), in this scenario, the application applies the surcharge from Level 2 only to any levels below that.

The calculation considers only Level 2. The total for the direct material cost group, Matl, is 10. Therefore, the surcharge amount is 1.


Rate calculation and subtype behavior

The following examples show how the values in the Subtype field in the Costing sheet setup form affect the results of rate calculation. The calculations are based on the following setup in the Costing sheet setup form.

Set up rates

1. In the Costing sheet setup form, on the Calculation tab, in the Code field, select the node on

which you want to calculate the rate.

In the following examples, the rate is applied to the Manufacturing node amount.

2. Under Rate, select a costing version, and in the Amount field, enter an amount.

In the following examples, the amount is 3.

29


Calculate rates by using the Process subtype

1. In the Costing sheet setup form, on the General tab, in the Subtype field, select Process.

2. In the Item details form, select an item of the BOM type, and then click Route.

3. In the Route form, on the Times tab, in the Setup time field, enter 2. In the Run time field, enter 5.

4. In the Item details form, click Price, and then click Calculation.


5. In the BOM calculation for an item form, in the Costing version field, select a costing version of the Planned cost type.


Price field: 159


7. Click Complete.

View the rate records upon BOM calculation by using the Process subtype

The explosion mode of the costing version is Multilevel, so the rate is calculated per level.

Because the subtype is set to Process in the Costing sheet setup form, an amount of 3 is added per unit of the process time (run time):

At Level 2, the run time is 1, so the rate is 3.

At Level 1, the run time is 5, so the rate is 15 (5 × 3).

31


Calculate rates by using the Setup subtype

1. In the Costing sheet setup form, on the General tab, in the Subtype field, select Setup.

2. Follow steps 2 through 4 of the procedure for calculation that uses the Process subtype.

3. In the BOM calculation for an item form, in the Explosion mode field, select Single level.


Price field: 105


5. Click Complete.

View the rate records upon BOM calculation by using the Setup subtype

The explosion mode is Single level, so the rate is calculated only in the top level.

The total rate amount is 6, because the calculation is based on the setup time, which is 2 (2 × 3 = 6). The rate amount is a constant cost contribution that is related to the setup time.


Surcharge calculation by using the Per item parameter

The following example shows how overhead is calculated for specific manufactured items.

Calculate surcharges by using the Per item parameter

1. In the Costing sheet setup form, on the General tab, in the Subtype field, select Level.

2. Select the Per item check box.

3. Click the Calculation tab, and then, in the Code field, select the node on which you want to calculate the surcharge.

4. In the Valid for field, select Table, and in the Relation field, select the item.

Note: When you enter a specific item, the application considers the total amount of the node for only this manufactured item. You can select any type of item, but this applies only to items of the BOM type.

5. In the Percentage field, enter a percentage. In this example, the percentage is 10.

6. In the Item details form, select an item of the BOM type, and then click Price.

7. Click Calculation, select a costing version, and then click OK. The following cost price is calculated:

Price field: 142


8. Click Complete.

33


View overhead per item upon BOM calculation by using the Per item parameter

In the following illustration, the surcharge percentage is calculated for the components of BOM2. Using the Per item parameter does not apply a percentage to the cost of BOM2.

Indirect cost calculation viewed from a production order

The following example shows the results of a BOM calculation from a production order. The calculation results are based on the structure that is defined in the costing sheet setup.


Set up the costing sheet

1. Click Inventory management > Setup > Bills of materials > Costing sheet setup.

2. Select a surcharge node, and then, on the General tab, in the Subtype field, select Level.

Perform a BOM calculation and associate the cost with a costing version

1. In the Item details form, select an item of the BOM type, and then click Price.

2. In the Item price form, delete any records on the Pending prices tab, and then click Calculation.

3. In the BOM calculation for an item form, in the Costing version field, select a costing version of the Standard cost type, and then click OK.

35


4. In the Item price form, click Complete.

Note If no surcharge or rate records are calculated, make sure that the date of the costing version that is used is correct. Set the date in the From date field on the Recording tab in the Costing version setup form to the current date.

5. Close the Complete BOM calculation form, and then, in the Item price form, click Activate.

Create adjustment lines

1. Click Inventory management > Journals > Item transaction > Profit/Loss.

2. Click New to create a new journal.

3. Click Lines, and then create three new lines to register stock for two items and one BOM item. In the following example, the records ItemA, ItemB, and BOM2 are created, each with a quantity of 10.

4. Click Post to post the journal.

Note: Before posting, click General ledger > Setup > Periods > Periods, and make sure that the ledger period is open.


Create and process a production order

1. Click Production > Production Order Details.

2. Create a new production order for a BOM item. In the following example, the record BOM1 is

created with a quantity of 1.

3. Click Update, and then click Estimation.

4. In the Estimation form, click OK.

View the results of a BOM calculation from a production order

1. In the Production orders form, click Inquiries, and then click Price calculation.

The information in the Calculation form corresponds to the information in the BOM calculation form.

The calculation is performed at a single level, because the item is a standard cost item.

37


2. Click the Overview Costing tab to view the actual and estimated costs for the production order.

3. Click the Costing sheet tab to view the data within the costing sheet structure.

4. Use the following filters to view the data:

In the Mode field, select Estimation to view estimated costs, or select Costing to view actual

costs.

In the Level field, specify whether to view the cost groups in a single-level or multilevel structure.

In the Per field, specify whether to view the costs per unit, per production lot size, or per specific quantity.


Update a production order by using automatic BOM calculation

1. In the Production orders form, click BOM.

2. Select a warehouse for all BOM lines, and then close the form.

3. In the Production orders form, click Update, and then click Start.

4. In the Start form, click the General tab. In the Automatic BOM consumption field select Always, and then click OK.

Note: Before you click OK in the Start form, click Basic > Setup > Calendar > Working time templates, and make sure that working times are set up correctly in the calendar.

View the results of a BOM calculation from a production order by using automatic

BOM consumption

1. In the Production orders form, click Inquiries, and then click Price calculation.

2. Click the Costing sheet tab, and then, in the Mode field, select Costing.

The form is now populated with data. The data corresponds to the estimation data, because no changes have been made to the BOM or route of the production order.

39


3. In the Production orders form, click Inquiries, and then click Indirect cost transactions.

In the Indirect cost transactions form, you can view details about each indirect cost transaction that has been posted. At this stage, only WIP postings have been performed.

4. In the Production orders form, click Inquiries, and then click Production posting.

In the Production posting form, you can view the transactions for the indirect costs that have been added to the production:

To view the inventory transactions for the indirect costs, click Inventory > Voucher transactions.

To view the ledger transactions for the indirect costs, click Ledger > Voucher.

5. In the Production orders form, click Update, and then click End.

6. Click OK to post the journal. The indirect cost transactions are now financially posted.


7. Click Inquiries, and then click Indirect cost transactions.

Note: The transactions appear as posted.

Production variances

When a production order for a standard cost item has been ended, you can calculate the production variances. Variances reflect a comparison of the reported production activities and the standard costs that are calculated for the production item.

The variances do not reflect a comparison to the production order’s estimated costs. The production activities that are reported include the consumption of material and routing operations, together with the associated indirect costs and the quantity that is reported as finished.

The following four types of production variances are calculated:

Lot size variance

Production quantity variance

Production price variance

Production substitution variance

41


Production variances and the difference between actual costs and calculated costs

The preceding illustration shows the four variances that cause the difference between a production order’s actual costs and the calculated costs within the item’s cost record when the production order is

ended.

Analyze the production variances

Use the Variance form or the Production variance report to analyze production variances, and to identify the sources of the variances.

1. Open the Variance form or the Production variance report:

To open the Variance form, click Production > Production Orders. Double-click a

production order to open the Production order details form, and then click > Inquiries > Price calculation > Variance.


To open the Production variance report, click Production > Reports > Analysis > Production variance.

2. In the Level field, select how you want to view the detailed variances:

Single – View variances by item and operation resource.

Multi – View variances by cost group.

Total – View summarized variances without a detailed breakdown.

3. If you want the variances to be tracked by cost group, in the Inventory parameters form, click the Bills of materials tab. Then, in the Variances to Standard field, select Sub ledger.

43


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Community Additions

Calculating standard costs for manufactured items [AX 2012]Updated: May 19, 2011


The topics in this section contain information about how to set up calculations for the standard costs for manufactured items.

About amortizing constant costs for a manufactured item

About displaying charges for a manufactured item

About manufactured items that are treated as purchased items

About BOM calculations

About BOM calculations that use the fallback principle

About BOM calculation of a suggested sales price

About information used in BOM calculations with standard costs

About order-specific BOM calculations


© 2017 Microsoft

Page 1 of 1Calculating standard costs for manufactured items [AX 2012]



About amortizing constant costs for a manufactured item [AX 2012]



A manufactured item’s constant costs reflect the operation setup times and the components that have a constant quantity or a constant scrap amount. The concept of a costing lot size is used to amortize these constant costs in the calculated cost of a manufactured item. This concept has several synonyms, one of which is accounting lot size. The concept of amortizing constant costs also has several synonyms, one of which is proportional constant costs.

The quantity of a costing lot size for a manufactured item is used in a bill of material (BOM) calculation. The quantity depends on how you initiate and perform the BOM calculation, as illustrated by the following:

• Default calculation quantity in an item’s BOM calculation − The item’s standard order quantity (for inventory) acts as the costing lot size, but the default value might be a greater quantity to reflect the item’s order quantity multiple. The item’s standard order quantity and multiple can be defined within its default order settings or site-specific order settings.

• Specified calculation quantity in an item’s BOM calculation − The specified calculation quantity acts as the costing lot size for the item. The calculation quantity initially uses the item’s standard order quantity, but the default value can be manually overridden. The specified calculation quantity represents the costing lot size for the specified item, and for manufactured components that have a BOM line type of production. This is









Page 1 of 2About amortizing constant costs for a manufactured item [AX 2012]





because it is assumed that the component will be produced to the exact quantity. The costing lot size for other manufactured components that have a BOM line type of item will reflect their standard order quantity.

• Specified make-to-order calculation quantity in an item’s BOM calculation − The specified calculation quantity acts as the costing lot size for the item and its manufactured components when BOM calculations use a make-to-order explosion mode. It is assumed that the manufactured components will be produced to the exact quantity, just like a manufactured component that has a BOM line type of production.

• Specified calculation quantity in an order-specific BOM calculation − An order-specific BOM calculation can be performed for a line item on a sales order, sales quotation, or service order. The specified calculation quantity uses the quantity on the originating line item, but the default quantity can be overridden. You can select whether the order-specific BOM calculation uses a make-to-order or multilevel explosion mode.

The calculated amount of a manufactured item’s amortized constant costs is termed charges.

See alsoAbout displaying charges for a manufactured item


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Page 2 of 2About amortizing constant costs for a manufactured item [AX 2012]



About displaying charges for a manufactured item [AX 2012]



Charges are the calculated amount of an item's amortized constant costs. The constant costs of a manufactured item reflect the operation setup times and the components that have a constant quantity or a constant scrap amount. For more information, see About amortizing constant costs for a manufactured item.

The calculated amount of an item's charges can be displayed with the item's unit costs. However, the charges are sometimes displayed as separate fields, and they are not included in the item's unit costs. When the charges appear as separate fields, one field displays the total amount of charges, and another field displays the costing lot size that is used to amortize the amount. The Item price form, for example, displays the charges as two separate fields. However, the Complete form displays the item's total cost per unit, and the amortized costs are included in the unit costs.

The charges for a manufactured item are always included in the item's unit cost for standard cost purposes. They can optionally be included for planned cost purposes. A policy in the costing version enforces the inclusion of charges in the cost of a manufactured item.

When you activate an item's cost record, you update the charges for the item's base cost information, which is displayed in the Item price form. The charges are displayed as two separate fields, and they are not included in the item's unit cost. Each activation updates the item's base cost information, even if the activation reflects different sites. Therefore, you should view the base cost information as reference information.









Page 1 of 2About displaying charges for a manufactured item [AX 2012]





See alsoAbout amortizing constant costs for a manufactured item


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About manufactured items that are treated as purchased items [AX 2012]



A manufactured item can be treated as a purchased item for master scheduling and cost-rollup purposes. Typical situations include a purchased item that is occasionally manufactured or a manufactured item that has been changed to being a primarily purchased item. The item is first designated as a manufactured item in order to define bill-of-material and route information, and to support production orders for the item.

The item cost record can be calculated for the manufactured item, but it might not match the standard cost that you want for purchasing purposes. The standard cost that must be manually entered and activated for the item cost record. In addition, a manufactured item at one site can be transferred to another site. Therefore, the item's cost must be manually entered and activated for the site that the item is transferred to.

When you use the manufactured item as a component in higher-level products, the component's costs should be treated as a purchased item. This applies whether the component’s costs were calculated or manually entered. That is, a BOM calculation should treat the item's costs as a purchased component instead of calculating costs that are based on its bill and route information. You can prevent this calculation from occurring by selecting the stop explosion flag that is embedded in the BOM calculation group that is assigned to the item.

You can prevent master scheduling calculations from exploding requirements through the item by selecting the stop explosion flag (for item coverage) for the item. The master scheduling calculation will treat the item as a purchased item and will not perform more calculations for its bill and route information.









Page 1 of 2About manufactured items that are treated as purchased items [AX 2012]





See alsoAbout BOM calculation groupsAbout BOM calculations


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About BOM calculations [AX 2012]



The Calculation form is used to calculate a manufactured item’s cost and to generate an associated item cost record within a costing version. The Calculation form can also be used to calculate a manufactured item’s sales price and to generate an associated item sales price record within a costing version. The cost roll-up and sales price calculations are termed BOM calculations, or bill of material (BOM) calculations, because you initiate them from the Calculationform.

Usage of the Calculation form varies slightly based on how you initiate the BOM calculations. Usage also depends on whether the BOM calculations involve a costing version for standard costs or planned costs, and depends on several policies defined within the costing version that is being used in the BOM calculations.

Note

A variation of the Calculation form is used in the context of a sales order, sales quotation, or service order line item. These are termed order-specific BOM calculations. An order-specific BOM calculation generates a calculation record that is displayed on the BOM calculation results form (rather than an item cost record within a costing version). The calculation record includes a calculated cost and a calculated sales price.









Other Versions

Page 1 of 4About BOM calculations [AX 2012]


The Calculation form can be initiated for a single manufactured item or for a costing version.

Initiate BOM calculations from the Item price form in order to calculate costs for a single manufactured item. The Calculation form inherits the item identifier, and the Calculation form requires specification of the costing version, BOM version, route version, calculation quantity, calculation date, and site.

• The BOM version and route version will initially display the active versions for the item, site, date, and calculation quantity, but the default can be overridden with approved versions.

• The calculation quantity will initially display the item’s standard order quantity, but the default can be overridden.

• The calculation date or site can be mandated by the costing version, or allow user-specified values when the date or site are not mandated in the costing version. A future calculation date determines the use of pending cost records. BOM calculations will use a pending cost record with the nearest from-date on or before the calculation date.

Initiate BOM calculations from the Costing version setup form (or the Costing version maintenance form) in order to calculate costs for all manufactured items or for selected items, or for updating items on a where-used basis. The Calculation form inherits the costing version.

• The calculations assume the use of the active BOM version and route version for a manufactured item (and the related site, date, and quantity), unless a manufactured component has a specified sub-BOM or subroute.

• The calculations assume the use of the standard order quantity for manufactured items, which provides the basis for calculating component quantities, for determining the relevant BOM versions and route versions (when you use quantity-sensitive BOMs and routes), and for amortizing constant costs. The assumption does not apply when a manufactured component has a BOM line type of production or vendor, or when you use a make-to-order explosion mode for the BOM calculations, because quantities will reflect the specified calculation quantity.

• The calculation date or site can be mandated by the costing version, or the calculation date or site can allow user-specified values when not mandated by the costing version.

Other variations in BOM calculations reflect the costing type and restrictions of the costing version, as summarized in the following diagram and described in the text that follows.

BOM calculations with standard costs must be restricted by costing version policies because the restrictions ensure standard costing principles. Standard costing principles require the enforcement of restrictions about the use of standard costs for purchased items, a single level explosion mode, and the inclusion of miscellaneous charges in unit costs. In contrast, BOM calculations with planned costs do not have to follow standard costing principles. These BOM calculations can use different explosion modes, alternative sources of cost data for purchased items, and optional enforcement of restrictions within the costing version.

BOM calculations with standard costs. Policies within the costing version (for standard costs) can mandate enforcement of five BOM calculation policies. The recording restriction check box within the costing version mandates one of these policies, where miscellaneous charges must be included in the unit price. Miscellaneous charges for purchased items can be manually entered, whereas the miscellaneous charges for manufactured items reflect the calculated amortization of constant costs.



The calculation restriction check box within the costing version mandates the other four BOM calculation policies.

• The source of purchased items’ cost contributions must be based standard costs. That is, BOM calculations must use the item cost records within the specified costing version, or within the fallback that contains standard costs.

• The explosion mode must be single level, which ensures accurate and consistent calculation of standard costs.

• The profit setting must be mandated in order to obtain consistent results in calculating the items’ sales price. The costing version must allow content of sales prices in order to use the profit setting and to generate the item sales price records.

• The fallback principle must be mandated, where the principle can be none, active cost records, or a specified costing version.

BOM calculations with planned costs. Policies within the costing version (for planned costs) can optionally mandate enforcement of five BOM calculation policies, or simply provide default values. The recording restriction check box within the costing version determines whether the BOM calculation policy about miscellaneous charges will be mandated, or act as a default value. Miscellaneous charges can be optionally included in the unit price.

The calculation restriction check box within the costing version determines whether the other four BOM calculation policies will be mandated or act as default values.

• The source of a purchased item’s cost contributions can be the item cost records within a costing version or the source can be defined by the BOM calculation group that is assigned to the item. For example, the BOM calculation group could define purchase price trade agreements as the source of cost contribution data.

• The explosion mode can be single level, multilevel, make-to-order, or based on the BOM line item. The explosion mode for BOM line type replicates the cost calculation logic for production order estimates.

• The profit setting can be mandated or a default value. The costing version must allow content of sales prices in order to use the profit setting and to generate the item sales price records.

• The fallback principle can be mandated or a default value, where the principle can be none, active cost records, or a specified costing version.

BOM calculations generate an Infolog that contains warning messages and other types of messages. Several BOM calculation policies determine the types of messages in the Infolog. The applicable warning conditions are defined within the BOM calculation group that is assigned to items, but you can override these warning conditions when you initiate a BOM calculation. When using the fallback principle, it is often helpful to display the fallback information as messages in the Infolog. When trying to update calculated costs for items with missing cost records, it is also helpful to identify items that did not get updated as messages in the Infolog.

See alsoAbout costing versionsAbout costing versions for standard costsAbout information used in BOM calculations with standard costs






About amortizing constant costs for a manufactured itemAbout displaying charges for a manufactured itemAbout manufactured items that are treated as purchased itemsAbout BOM calculations that use the fallback principleAbout BOM calculation of a suggested sales price


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About BOM calculations that use the fallback principle [AX 2012]



Bill of materials (BOM) calculations that use cost records in a single, specified costing version do not use a fallback principle. However, BOM calculations that use another costing version or active cost records as a fallback principle can be useful in certain situations. The fallback principle indicates an alternative source of cost data if there is no cost data in the specified costing version. The following situations illustrate two uses of the fallback principle:

• Two-version approach to standard cost updates – A costing version can contain the incremental changes to standard costs, such as pending cost records that represent new items or cost changes. In this situation, the fallback principle can identify the use of the active standard costs that are contained in other costing versions.

• Simulating the effect of cost changes with planned costs – A costing version for planned costs can contain incremental changes for simulation purposes. This costing version would include pending cost records that represent the simulated cost changes to items, cost categories, and calculation formulas for indirect cost. In this situation, the fallback principle can identify the use of the active standard costs that are contained in other costing versions.

See also









Page 1 of 2About BOM calculations that use the fallback principle [AX 2012]





About managing standard cost updatesAbout simulating cost changes by using a costing version for planned costsAbout BOM calculations


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About BOM calculation of a suggested sales price [AX 2012]



Bill of material (BOM) calculations can be used to calculate a manufactured item’s suggested sales price, based on a cost-plus markup approach. By using a cost-plus markup approach, the item’s calculated sales price reflects the set of profit-setting percentages that is specified for the BOM calculation and the costs that are associated with its component items, routing operations, and applicable manufacturing overheads. The markup reflects profit-setting percentages that are assigned to cost groups and the cost groups that are assigned to items, cost categories for routing operations, and the indirect cost calculation formulas for manufacturing overheads.

The sets of profit-setting percentages are labeled Standard, Profit 1, Profit 2, and Profit 3. Within the Profit 1 set, for example, a profit-setting percentage of 50 percent could be defined for a cost group that is assigned to purchased material, and a profit-setting percentage of 80 percent could be defined for a cost group that is assigned to cost categories for routing operations.

The context of the BOM calculation determines how the results of a calculated sales price will be handled:

• BOM calculation for an item and specified costing version − The BOM calculation generates a pending sales price record the costing version. This sales price record provides the starting point for viewing the calculation details, such as viewing the Calculate item cost form. The sales price record primarily acts as reference information, and it is not used as the basis for a sales price on sales orders.









Page 1 of 2About BOM calculation of a suggested sales price [AX 2012]





• Order-specific BOM calculation − A variation of the BOM calculation form is used in the context of a sales order, sales quotation, or service order line item. An order-specific BOM calculation generates a calculation record that is displayed on the BOM calculation results form instead of a record in a costing version. This calculation record provides the starting point for viewing the calculation details, such as viewing the Calculate item cost form. Information about a selected calculation record can be transferred to the originating line item, such as transferring the calculated sales price to a sales order line item.

See alsoAbout BOM calculationsAbout costing versions containing item sales prices related to BOM calculationsAbout order-specific BOM calculations


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About information used in BOM calculations with standard costs [AX 2012]



Bills of material (BOM) calculations use data from several sources to calculate the standard costs of a manufactured item. The sources include information about items, bills routings, indirect cost calculation formulas, and the costing version.

The purchased item information that is used in a standard cost BOM calculation includes the following:

• Cost − A purchased item’s costs are maintained as site-specific cost records in a costing version for standard costs. Each cost record has an effective date, and the BOM calculation date determines which cost record will be used. For example, a BOM calculation with a future calculation date might use a cost record with a pending status and a future effective date.

• Cost group − The cost group that is assigned to a purchased item provides the basis for cost segmentation in the calculated costs of a manufactured item.

• Warning conditions that are embedded in the item’s BOM calculation group enable the BOM calculation to identify potential problems. This can be when the purchased item has a zero cost, a zero quantity in a BOM, or an out-of-date cost record. The applicable warning conditions can be overridden when initiating a BOM calculation.









Page 1 of 4About information used in BOM calculations with standard costs [AX 2012]


The manufactured item information that is used in a standard cost BOM calculation includes the following:

• Standard order quantity for inventory − The item’s standard order quantity for inventory, acts as the default accounting lot size for amortizing constant costs in a BOM calculation. The accounting lot size will also reflect the order quantity multiple if it is specified.

• Warning conditions that are embedded in the item’s BOM calculation group enable the BOM calculation to identify potential problems. One example could be that the manufactured item does not have a BOM or route. The applicable warning conditions can be overridden when initiating a BOM calculation.

The bill of material information that is used in a standard cost BOM calculation includes the following:

• BOM version − The BOM version that is assigned to the manufactured item has effective from and to dates, and a status for approved and active. The bill version can be company-wide or site-specific, and it can optionally reflect quantity breakpoints.

• BOM line item quantity − A component typically has a variable quantity required, but it can be a constant. The component quantity is typically expressed for producing one parent item, but it may be expressed per 100 or per 1000 to handle decimal precision issues. The component quantity can also be calculated based on measurements.

• BOM line item scrap − A component can have a variable or constant quantity for planned scrap.

• BOM line item valid dates − A component can have valid from and to dates.

• BOM line item type of production − The costing lot size for amortizing constant costs will reflect the BOM calculation quantity and a make-to-order explosion mode, because the BOM calculation assumes that the manufactured component will be produced to the exact quantity instead of its standard order quantity.

• Sub-BOM for a manufactured component − A manufactured component can optionally have a specified BOM version, which would be used instead of the item’s current active BOM version in a BOM calculation.

• Sub-route for a manufactured component − A manufactured component can optionally have a specified route version, which would be used instead of the item’s current active route version in a BOM calculation.

• Operation number and the impact of operation scrap percentages − The operation number links a component to a specific operation, and operations can have a scrap percentage. The linkage enables BOM calculations to account for scrap percentages and cumulative scrap percentages across multiple operations on the component’s required quantity.

• Ignore BOM line item in cost calculations − A component can be ignored for BOM calculation purposes.

The operations resource information that is used in a standard cost BOM calculation includes:

• Hourly costs − The hourly costs that are associated with an operations resource are expressed as cost categories that are assigned to set up time and run time. These cost categories should be identified for resource groups and operations resources. The hourly costs that are associated with a cost category can be site-specific or company-wide.



• Per unit costs − Some manufacturing environments assign operations resource costs per unit of output, which would be expressed as a different cost category for quantity. For example, the quantity-related costs can reflect piece rates for labor, or a paint manufacturer may assign operations resource costs per gallon of output.

• Overriding operations resource information on routing operations − The resource information about cost categories will be inherited by operations, where it can be overridden. BOM calculations will use the cost category information that is specified on the routing operations.

• Cost group for a cost category − The cost group that is assigned to a cost category provides cost segmentation in the calculated costs of a manufactured item. For example, different cost groups might be used to segment the calculated costs that are associated with machines and labor or with setup and run time.

The route information that is used in a standard cost BOM calculation includes:

• Route version − The route version that is assigned to the manufactured item has effective from and to dates, and a status for approved and active. The route version must be site-specific, and it can optionally reflect quantity breakpoints.

• Routing operation time − The time can be specified for runtime and setup time. The hourly time is typically expressed for producing one parent item, but it may be expressed per 100 or per 1000 to handle decimal precision issues.

• Routing operation time for secondary resources − A secondary resource has the same operation number as the primary resource, and the same routing operation time. For example, an operation might require a machine as the primary resource and labor and tools as secondary resources.

• Routing operation scrap percentage − BOM calculations will account for scrap percentages and cumulative scrap percentages across multiple operations. This applies to the required time for routing operations and the required quantity for components that are linked to operation numbers.

• Cost categories for a routing operation − Operations resource information about cost categories will be inherited by operations, where it can be overridden. BOM calculations will use the cost category information that is specified on the routing operations.

The manufacturing overhead information that is used in a standard cost BOM calculation includes:

• Surcharge − A surcharge calculation formula reflects a percentage of value, such as 100 percent, that is tied to a specific cost group, such as labor.

• Rate − A rate calculation formula reflects an amount per unit, such as USD 10.00 per hour, that is tied to a specific cost group, such as labor.

• Time-based versus material-based overhead − The manufacturing overhead can be tied to routing operations or material components.

The costing version information that is used in a standard cost BOM calculation includes:






• Costing type − The costing version must contain standard costs. Several restrictions apply to BOM calculations that use standard costs. For example, these restrictions specify that miscellaneous charges must be included in unit costs and that the BOM calculation explosion mode must be single level.

• Mandated fallback principle − The costing version can mandate the use of a fallback principle, such as using a specified costing version or the active cost records. The mandated fallback principle typically applies to a costing version that represents the incremental updates in a two-version approach for cost updates.

• Blocking flag for pending costs − A blocking flag can prevent BOM calculations of the pending cost for manufactured items.

• Specified from-date − The specified from-date will act as the default calculation date for all BOM calculations that involve the costing version.

• Specified site − A specified site will limit BOM calculations to the single site.

• Content of the costing version must include costs − The content must include costs. It can optionally include sales prices in order to calculate suggested sales prices for manufactured items.

Several sources of information can be specified when initiating a BOM calculation. This includes the site, the calculation date, and the costing version.

See alsoAbout BOM calculations


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About order-specific BOM calculations [AX 2012]

Updated: June 21, 2011


An order-specific bill of materials (BOM) calculation represents a variation of a BOM calculation for a manufactured item. An order-specific BOM calculation is performed in the context of a sales order, sales quotation, or service order line item. An order-specific BOM calculation generates a calculation record that is displayed in the BOM calculation results form. The calculation record includes a calculated weight, a calculated cost that is based on active cost records, and a calculated sales price. Each order-specific BOM calculation for an item generates a calculation record in the BOM calculation results form, uniquely identified by a calculation number. The results of a calculation record can optionally be transferred to the originating line item.

An order-specific BOM calculation differs from a BOM calculation for a manufactured item. First, an order-specific BOM calculation does not generate an item cost record throughout a costing version. This results in the BOM calculation policies not applying to create an item cost record or to overwrite a cost record. Second, an order-specific BOM calculation always uses the active cost records for components, cost categories, and indirect cost calculation formulas.










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Community Additions

Maintaining standard costs in a manufacturing environment [AX 2012]Updated: May 19, 2011


The topics in this section contain information about how to maintain standard costs in a manufacturing environment.

About updating standard costs for a new manufactured item

About simulating cost changes by using a costing version for planned costs

Set up initial standard costs in a manufacturing environment

Update standard costs in a manufacturing environment

About updating standard costs in a manufacturing environment


© 2017 Microsoft

Page 1 of 1Maintaining standard costs in a manufacturing environment [AX 2012]



About updating standard costs for a new manufactured item [AX 2012]



Manufacturing environments involve maintaining standard costs for new manufactured items. A typical scenario involves a new manufactured item that has a new bill of materials (BOM) that contains new purchased items and new manufactured items as components. The following guidelines focus on this typical scenario.

The following guidelines assume use of a two-version approach to standard cost updates. In this approach, one costing version contains the first defined standard costs for the frozen period, and the second costing version contains the incremental updates that pertain to the new manufactured items. The incremental updates are entered as cost records in the second costing version and, ultimately, enabled.

The two-version approach requires the definition of a second costing version. The guidelines for defining this costing version include the following:

• Assign a costing type of standard costs.

• Assign a significant identifier to the costing version that communicates the contents, such as 2008-UPDATES.


• Allow the entry of cost records for all sites. Entering a site limits the entry of cost records to the specified site.

• Use a fallback principle of active costs.

To add new manufacturing items throughout the frozen period, follow these steps:






Page 1 of 3About updating standard costs for a new manufactured item [AX 2012]


1. Use the Costing version setup form to allow the entry of cost records into the second costing version that contains the incremental updates. Prevent the activation of pending costs, where activation is allowed after pending costs have been completely and accurately defined. Indicate a blank from-date as a policy in the costing version, and then enter the from-date when you enter each cost record. The from-date should represent a date before the new items are purchased or manufactured.

2. Use the Price form to enter cost records for new purchased items. For each cost record, enter the costing version that contains incremental updates, and use a from-date that comes before the expected manufacturing date for new manufactured items.

3. Calculate the cost of new manufactured items by using the Calculation form. You can open the Calculationform from the Costing version maintenance form and then selecting the costing version that contains the incremental updates. Use the selection criteria to selectively identify the new manufactured item and any one of its manufactured components. In a multilevel product structure, you might also have to selectively identify any parent item that contains the new manufactured items as a component.

Enter a from-date for the BOM calculation that corresponds to the start of manufacturing for the new manufactured items. The from-date should be in the effective dates for the item’s BOM version and route version.

Note

A missing cost record can indicate a new manufactured item. BOM calculations can be limited to items that have missing costs.

Verify the calculated costs for new manufactured items for completeness and accuracy. Use the Completeform to review the calculated costs for each item-cost record and any Infolog of warning messages. Alternatively, use the Calculation form to review the calculated costs.

4. Change the blocking flag to allow the activation of pending-cost records in the second costing version by using the Costing version setup form.

5. Enable all pending-cost records in the second costing version by using the Activate prices form, which you can open from the Costing version maintenance form. You can also enable the pending-cost records for individual items by opening the Price form and then clicking the Activate button.

6. Use the Costing version setup form to change the blocking flags in the second costing version to prevent additional data maintenance. The blocking policies prevent the entry of new pending costs and the activation of pending costs.

See alsoSet up initial standard costs in a manufacturing environmentUpdate standard costs in a manufacturing environment







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About simulating cost changes by using a costing version for planned costs [AX 2012]



The effects of cost changes on a manufactured item’s calculated costs can be simulated with a separate costing version for planned costs. Use the separate costing version for entering pending cost records that reflect incremental cost changes, and for calculating the cost impact on manufactured items. A fallback principle of active costs will be used in the BOM calculations so that only the incremental cost changes must be entered.

Use the following guidelines for defining the simulation costing version.

• Assign a costing type of planned costs.

• Assign a meaningful identifier for the costing version, such as simulation.


• Allow the entry of cost records. Do not block the entry of pending costs.

• Allow the entry of cost records for all sites. Entering a site will limit the entry of cost records to the single site.

• Prevent the activation of pending costs. Only pending costs must be entered for cost records in the simulation costing version.

• Do not enter a from-date. A calculation date will be entered for each BOM calculation that uses the simulation costing version.

• Indicate a fallback principle of current active. The fallback principle allows the entry of incremental cost changes for simulation purposes, while using the current active costs as the source for all other cost records. It is assumed that all current active costs exist for all other cost records.






Page 1 of 3About simulating cost changes by using a costing version for planned costs [AX 2012]


• Indicate a cost price model of version cost price, but do not restrict calculations. For example, the simulations could also use a cost price model of BOM calculation group to indicate the source of cost contribution data for purchased items.

• Indicate an explosion mode of multilevel, but do not restrict calculations. The simulations could use other explosion modes.

Costing versionsThe following scenarios illustrate the use of the simulation costing version to simulate the impact of cost changes. Prior to entering a simulated cost change, delete the pending cost records in the simulation costing version so that you have a clean starting point. Use the Item price form to view and delete the pending cost records that are related to item prices and cost category prices.

• Simulate the cost change for a purchased item. For example, the cost change may reflect an expected increase or decrease in the costs of critical purchased materials. To define the different cost for a purchased item, use the Item price form to enter a pending cost record in the simulation costing version.

• Simulate the cost change for a cost category. For example, the cost change may reflect an expected increase or decrease in labor rates, or in hourly rates for operations resources. To define the different cost for a cost category, use the Cost category price form to enter a pending cost record in the simulation costing version.

• Simulate the cost change in an indirect cost calculation formula. For example, the cost change may reflect an expected increase or decrease in manufacturing overheads. To define the change in an indirect cost calculation formula, use the Costing sheet setup form to enter a pending cost record in the simulation costing version, and to validate and save the change.

After entering the simulated cost changes, calculate the costs for manufactured items that are affected by the cost changes. Use the Calculation form for the simulation costing version, and identify the selected manufactured items that will be affected by the cost changes. The BOM calculations apply to all manufactured items unless you identify the selected items. Alternatively, you can use the BOM calculation option for where-used updates.

View the item cost records in the simulation costing version to analyze how the simulated cost changes affected the costs of the selected manufactured items. Use the Item price form and the Calculate item cost form to view and analyze the costs.








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Set up initial standard costs in a manufacturing environment [AX 2012]



Manufacturing environments involve maintaining standard costs for purchased items and manufactured items, which includes the first time setting standard costs. Additional steps are required in manufacturing environments that use routing information for costing purposes. These guidelines assume the use of a single costing version when you set standard costs for the first time. This costing version will contain standard costs for the current period. Pending cost records for all items will be entered in this costing version.

1. Define the costing version by using the Costing versions form. Guidelines for this costing version include the following:


◦ Assign a meaningful identifier for the costing version, such as 2008-STANDARD.



◦ Allow the entry of cost records for all sites. Assigning a site will limit the entry of cost records to the specified site.

◦ Prevent the change to active status. The change to active status will be enabled after pending costs have been accurately defined.

◦ Optionally enter a from-date. As a general guideline, use a future date that represents the planned cutover date or the first day in the frozen period when you prepare cost data beforehand.






Page 1 of 3Set up initial standard costs in a manufacturing environment [AX 2012]


◦ Indicate a fallback principle of none.

2. Use the Price form to enter item cost records for purchased items in the costing version. A separate cost record must be entered for each site that purchases or stocks the item. The cost should reflect the standard costs for the period. If a cost was entered incorrectly, change the pending cost for the item. A pending cost can also be deleted.

Verify item cost records in the costing version for completeness and accuracy. Use the Item price report to review a list of item cost records.

3. When you use routing information for costing purposes, use the Price form to enter cost records. This must be in the costing version to define the hourly rate or piece rate that applies to each cost category. The cost record can reflect a company-wide hourly rate or a site-specific hourly rate. The cost should reflect the standard costs for the period. If a cost was entered incorrectly, change the pending cost for the cost category. A pending cost can also be deleted.

Verify cost records in the costing version for completeness and accuracy.

4. When you must calculate manufacturing overheads, use the Costing sheet setup form to enter the indirect cost calculation formulas for surcharge and rate nodes. The cost record can reflect a company-wide calculation formula or a site-specific calculation formula, and it can reflect item-specific calculation formulas. If a cost record was entered incorrectly, change the pending cost record or delete it.

Validate and save the costing sheet setup. Correct any errors that are identified by the validation process.

Verify cost records in the costing version for completeness and accuracy. Use the Indirect cost rate and ratioreport to review a list of cost records.

5. Calculate the cost of all manufactured items by using the Calculation form. You can access the Calculationform from the Costing version setup form, and by selecting the current period’s costing version.

Verify the calculated costs for manufactured items for completeness and accuracy. Use the Complete form to review the calculated costs for each item cost record, and any Infolog warning messages. Alternatively, use the Calculation report to review a list of the calculated costs.

6. Use the Costing versions form to change the blocking flag so that the status of pending cost records can be changed to active.

7. Change the status to active for all pending item cost records in the costing version on the cutover date. Use the Activate prices form to change status all cost records. You can access the Activate prices form from the Costing version setup form for the current period’s costing version.

Alternatively, change the status of individual cost records in the costing version. Use the Price form to change the status of pending cost records for individual items. Use the Price form to change the status of pending costs for individual cost categories. Use the Costing sheet setup form to change the status of individual calculation formulas for indirect costs.

8. Use the Costing versions form to change the blocking flags in the second costing version to prevent additional data maintenance.

Repeat the steps in this procedure for separate costing versions when they contain site-specific costs for a multisite operation.






See alsoAbout updating standard costs in a manufacturing environmentUpdate standard costs in a manufacturing environment


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Update standard costs in a manufacturing environment [AX 2012]



Manufacturing environments maintain standard costs for purchased and manufactured items. This maintenance includes periodically updating standard costs. Periodic updates reflect a new frozen period and the need to update standard costs for all items. Additional steps are required in manufacturing environments that use routing information for costing purposes. The following guidelines assume the use of a separate costing version to contain the next period's standard costs. Pending cost records for all items are entered in this costing version.

1. Use the Costing version setup form to define the costing version for the next period. Guidelines for this costing version include the following:


◦ Assign a meaningful identifier to the next period's costing version. For example, if 2012 is the next frozen period, you might use 2012-STANDARD.



◦ Allow the entry of cost records for all sites. If you specify a site, you limit the entry of cost records to that site.

◦ Prevent the activation of pending costs. The status of cost records will be changed to active after pending costs have been completely and accurately defined.

◦ Enter a from-date. As a general guideline, use a future date that represents the first day of the next frozen period.






Page 1 of 3Update standard costs in a manufacturing environment [AX 2012]


◦ Indicate a fallback principle of none.

2. Analyze the need to change standard costs for items. Use the Standard cost variance analysis report to analyze the historical purchase price and production variances, and to suggest a new standard cost.

3. Use the Price form to enter item cost records for purchased items in the next period's costing version. A separate cost record must be entered for each site that purchases or stocks the item. The cost should reflect the standard costs for the period. If a cost was entered incorrectly, change the pending cost for the item. A pending cost can also be deleted.

Alternatively, you can automatically enter costs by copying item cost records. The cost records can then be maintained by using the Price form. Use the Copy item prices form to copy active item cost records for standard costs into the next period's costing version. You should copy active costs if you used a two-version approach to cost data updates for the current period, because active cost records will be located in more than one costing version.

You can selectively copy item cost records to populate the next period's costing version, and you can copy them multiple times. Existing costs can be selectively changed by a factor or an amount. Existing charges can also be changed by a factor or an amount.

4. Use the Item prices report to review the completeness and accuracy of the item cost records in the costing version.

5. When you use routing information for costing purposes, use the Cost category price form to enter cost records in the next period's costing version. Also define the hourly rate or piece rate that applies to each cost category. The cost record can reflect a company-wide or site-specific hourly rate. The cost should reflect the standard costs for the next period. If a cost was entered incorrectly, change the pending cost for the cost category. A pending cost can also be deleted.

6. Review the completeness and accuracy of the cost records in the next period's costing version.

7. When you calculate manufacturing overhead, use the Costing sheet setup form to enter the calculation formulas for indirect costs for surcharge or rate nodes. The cost record can reflect a company-wide or site-specific calculation formula. The cost record can also reflect item-specific calculation formulas. If a cost record was entered incorrectly, change the pending cost record or delete it.

8. Validate and save the setup of the costing sheet. Correct any errors that the validation process identifies.

9. Review the completeness and accuracy of the cost records in the next period's costing version. Use the Indirect cost rate and ratio report to review a list of item cost records.

10. Use the Calculation form to calculate the cost of all manufactured items. You can open the Calculation form from the Costing version setup form. You can also open it by selecting the next period's costing version.

11. Review completeness and accuracy of the calculated costs for manufactured items. Use the Complete form to review the calculated costs for each item cost record, and to review any Infolog messages. Alternatively, use the Calculation report to review a list of the calculated costs.

12. Use the Costing version setup form to change the blocking flag for the next period's costing version to allow activation of pending cost records.






13. Activate all pending item cost records in the next period's costing version no earlier than the first day of the next period. Use the Activate prices form for the next period's costing version. You can open the Activate prices form from the Costing version setup form. You can also activate the pending cost records for individual items by clicking the Activate button in the Price form.

Alternatively, you can activate individual cost records in the costing version. Use the Price form to activate pending cost records for individual items and individual cost categories. Use the Costing sheet setup form to activate individual calculation formulas for indirect costs.

14. Use the Costing version setup form to change the blocking flags in the next period's costing version to prevent additional data maintenance.

Repeat the steps in this process every time that you must enter and activate costs for a new period.

See alsoSet up initial standard costs in a manufacturing environmentAbout updating standard costs in a manufacturing environment


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About updating standard costs in a manufacturing environment [AX 2012]



Manufacturing environments involve maintaining standard costs for purchased items and manufactured items, which includes the scenario for updating standard costs throughout the frozen period. Updates may reflect new items, cost categories, or indirect cost calculation formulas, corrections, and cost changes. The type of update will affect the steps that are required to update standard costs, as illustrated in the following cases.

• Enter expected standard cost changes for purchased items, and then change the status of the item cost records to active on the appropriate date. However, do not recalculate the costs of manufactured items that use the purchased items.

• Enter standard costs for a new purchased item, but do not recalculate the costs of manufactured items with a bill of material (BOM) version that contains the new purchased item as a component.

• Correct or change the cost of a purchased item, or change the cost group that is assigned to a purchased item, and calculate the cost for all manufactured items with a BOM version that contains the purchased item as a component.

• Change the cost for a cost category, and calculate the cost for all manufactured items with a route version that contains routing operations that use the cost category.

• Change the cost categories that are assigned to routing operations or the cost group that is assigned to cost categories. Then calculate the cost for all manufactured items with a route version that contains routing operations that use the cost category.

• Change an indirect cost calculation formula, and calculate the cost for all manufactured items that are affected by the change.






Page 1 of 2About updating standard costs in a manufacturing environment [AX 2012]





• Change or add a manufacturing site for a manufactured item, and calculate the item's manufactured cost for the site.

• Calculate, or recalculate, the cost for a manufactured item, and recalculate the cost for all manufactured items with a BOM version that contains the manufactured item as a component.

• Calculate costs for a new manufactured item based on its defined, approved, and active BOM and route information.

Each case requires careful consideration about how to update standard costs.

See alsoAbout updating standard costs for a new manufactured item


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Community Additions

Setting up and maintaining cost categories [AX 2012]



The topics in this section provide information about how to set up and maintain cost categories. Cost categories are the ledger accounts of cost accounting.

About cost categories

About service categories

Create cost categories (CA)


© 2017 Microsoft

Page 1 of 1Setting up and maintaining cost categories [AX 2012]



About cost categories [AX 2012]



The function of a cost category in Cost accounting is equivalent to the function of a chart of accounts in General ledger. Cost amounts are posted to cost categories through general ledger postings or cost accounting postings.

Each cost category must have one of the following three cost types assigned to it:

• Primary costs: Primary costs are always posted directly. They can be set up to be identical to the following general ledger accounts: profit and loss, revenue, or costs. When the cost categories are the same as general ledger accounts, they are created automatically as primary costs.

• Secondary costs: Secondary costs cannot be posted directly. They are used to post allocations. When you set up allocations, cost categories that are secondary costs are mandatory.

• Service categories: Service categories are used to post quantities. They are usually linked with the production cost categories or the project categories. For more information, see About service categories.

When a cost category is created manually in Cost accounting, the local account option is enabled automatically, and the cost category can be used in cost accounting only. The cost category numbers cannot be used later as account numbers for general ledger accounts.

Referencing a general ledger accountThere are two ways to reference a general ledger account:

• If the cost categories and the general ledger accounts (profit and loss, cost, and revenue) are identical, enable the transaction control after you create a new ledger account.

• If the cost categories and the general ledger accounts are not identical, create the cost categories manually, and then link them to the general ledger account by using the Cost category reference form.



Create cost categoriesOther Versions

Page 1 of 2About cost categories [AX 2012]





Transaction controlIf no dimension is selected, no cost transactions are created by the general ledger, and no posting entries are possible for this cost category. When one or more dimensions are enabled, cost transactions are created.

Note

When more than one dimension is selected for a cost category, Cost accounting creates one cost transaction for each dimension.

When a dimension in one or more cost categories is enabled, general ledger transactions can be reposted to the Process ledger transactions form to create cost transactions. (Click Cost accounting > Periodic > Transactions> Process production transactions.)

After the transactions have been created, the dimension cannot be cleared for this cost category.

See alsoSetting up and maintaining cost categoriesCreate cost categories (CA)Chart of accounts (form)


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About service categories [AX 2012]



Service categories are a type of cost category. Service categories can be posted only by using numerical quantities, such as hours or units.

There are two types of service categories:

• General quantity itemization – Quantities that are used for distribution or allocation.

• Internal cost allocation – Quantities that are used for calculation of labor costs in production or projects.

Both types of service categories can be linked to production or to a project.

See alsoSetting up and maintaining cost categories


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> Cost accounting > Setting up and maintaining cost accounting > Setting up and maintaining cost categories

Create cost categories (CA) [AX 2012]



1. Click Cost accounting > Common > Cost categories.

2. Press CTRL+N to create a new line.

3. In the Cost category field, enter the appropriate information.

4. In the Cost type field, select either Primary costs, Secondary costs, or Service category.

5. On the General tab, in the Transaction control field group, select the check boxes for the dimensions that you want to create cost transactions for.

See alsoSetting up and maintaining cost categoriesAbout cost categories

Announcements: To see known issues and recent fixes, use Issue search in Microsoft Dynamics Lifecycle Services (LCS).

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Community Additions

Working with cost accounting [AX 2012]Updated: May 4, 2011


This section provides overviews of the main business process components in Cost accounting. The topics in this section provide information about the main business processes you can perform in Cost accounting.

Dimensions in cost accounting

Expense distribution sheet

Calculations, allocations, and distributions

Budgeting in cost accounting

Journals and posting in cost accounting

See alsoSetting up and maintaining cost accounting


© 2017 Microsoft

Page 1 of 1Working with cost accounting [AX 2012]

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Dimensions in cost accounting [AX 2012]



The following topics provide information about dimensions in cost accounting.

Topic Description

About querying dimension balances

Provides conceptual information about how to query dimension balances in cost accounting.

See alsoCost accounting


Dimensions in cost accounting


Structures

Expense distribution sheet

Calculations, allocations, and distributions

Budgeting in cost accounting

Journals and posting in cost accounting

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> Cost accounting > Working with cost accounting >

About querying dimension balances [AX 2012]



Click Cost accounting > Common > Cost categories.

To view dimension balances for cost categories in the Cost categories form, select a cost category, select either Primary costs or Secondary costs in the Cost type column, and then click Dimension balance > Cost category.

To view query dimension balances for service categories in the Cost categories form, select a cost category, select Service category in the Cost type column, and then click Dimension balance > Service category.

In the Dimension balance form, you can view the dimension balances for the selected period and for two different value types. For each column group, you can select the following value types:

• Actual costs

• Budget costs

• Basic plan costs

• Flexible plan costs

• Target costs

Note

If you select Basic plan costs, Flexible plan costs, or Target costs, you must select a budget model.

The Total values section consists of two areas:

• The total of primary costs, secondary costs, and total costs


Structures

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Page 1 of 2About querying dimension balances [AX 2012]





• The dimensions that these costs are posted to

Primary costs are posted to ledger accounts. Secondary costs are generated only in Cost accounting.

For the selected dimension, you can display cost, service, and calculation transactions by clicking Transactions. To display cost balances, click Cost balance.


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Structures [AX 2012]



The topics in this section provide information about the line structures and hierarchy structures that are used in Cost accounting.



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Structures


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> Working with cost accounting > Dimensions in cost accounting >

Create hierarchy structures [AX 2012]



Hierarchy structures help you group and summarize dimensions.

1. Click Cost accounting > Setup > Grouping > Hierarchies.

2. Click New or press CTRL+N to create a new line.

3. In the Hierarchy field, enter the number of the hierarchy.

4. Select the check box for each dimension that you want to include in the hierarchy structure.

5. Click the Divisions button.


7. In the Division field, enter the division number that you want to track, and then close the form to save your changes.

8. In the Hierarchies form, click the Hierarchy structure button.

9. To add to the hierarchy structure, double-click the items on the Dimension and Division tabs.

Note

In a hierarchy structure, dimensions can be grouped by division. The groups are used to set up the Expense distribution sheet.

See alsoExpense distribution sheet


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Expense distribution sheet [AX 2012]



The following topics explain how to set up and use an expense distribution sheet in Cost accounting.

Create an expense distribution sheet

Run a report


© 2017 Microsoft

Page 1 of 1Expense distribution sheet [AX 2012]



Create an expense distribution sheet [AX 2012]



You must create an expense distribution sheet (EDS) before you can run an EDS report. In the EDS, you must set up the report lines and report columns that will appear in the report.

Types of EDSThere are two types of EDS: dimension statement and cost statement.

• Dimensions statement – Use this EDS to report and compare results of different dimensions. Each column corresponds to one dimension.

• Cost statement – Use this EDS to create a report for one or more dimensions or divisions. However, results for each dimension or division appear on a separate page, and columns compare actual and budget costs for each dimension or division.

Setup of EDSTo create a new EDS:

1. Set up a line structure. The line structure is the basis for report lines.

2. Set up a calculation type. The calculation type determines the cost balances that are considered for the report. Select from among the following calculation types:

◦ Period calculation

◦ Special calculation

◦ Plan calculation


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Page 1 of 3Create an expense distribution sheet [AX 2012]





3. Set up a report type. The report type determines the type of EDS report, whether it is a dimension statement or a cost statement.

4. Set up a hierarchy. You must select a hierarchy if you want to use the cost statement for hierarchies.

Report linesYou can manually or automatically define lines that you want to view in the report by using the transfer lines function.

Report lines are identical to cost lines for the selected line structure.

If the lines are entered automatically, you can still modify them by deleting or changing their position in the report. Change their position in the report by using the up and down buttons.

Report columnsYou can define columns that you want to view in the report.

See alsoCost accounting report (form)Expense distribution sheetRun a report


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of 3Create an expense distribution sheet [AX 2012]



Run a report [AX 2012]



There are three different expense distribution sheet (EDS) reports:

• Dimension statement

• Cost statement, dimensions

• Cost statement, hierarchy

Generate an EDS1. Click Cost accounting > Setup > Expense distribution sheet. Open one of the EDS reports.

2. On the General tab, use the Identification list to select the statement that you created in the EDS setup.

3. In the Calculation type list, select either Period calculation or Special calculation. The calculation type is usually entered in the EDS setup, but you can modify it here before you generate the report. If you select Special calculation, you must select a calculation number in the Calculation number list.

4. If you did not set up a specific date interval for each dimension in the EDS setup, you can configure date interval settings in the Date interval area before you generate the report.

5. On the Column definition tab, you can modify the value type and budget model in the appropriate columns.

6. Click OK to generate the report.

Dimension statementIn addition to modifying settings that are common to the types of EDS, when you run a dimension statement, you can modify the dimension setup or the divisions for each column.


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Page 1 of 2Run a report [AX 2012]





Cost statement, dimensionsWhen you run a cost statement for dimensions, select any dimension type and the range of dimensions that you need.

Cost statement, hierarchyWhen you run a cost statement for hierarchies, select a hierarchy, if you have not already done this, and then select the range of divisions.

See alsoExpense distribution sheetCreate an expense distribution sheet


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Calculations, allocations, and distributions [AX 2012]



The topics in this section provide information about how to use calculations, allocations, and distributions in Cost accounting.

Create reference tables


Define an internal cost allocation

Define a surcharge allocation


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Page 1 of 1Calculations, allocations, and distributions [AX 2012]



Create reference tables [AX 2012]



Reference tables are used as the basis for calculations for the distribution or allocation of costs or quantities. Reference tables are typically used when references are fixed for several periods. Examples of reference tables are square meters, headcount, equipment calculation, and so on.

1. Click Cost accounting > Setup > Calculation > Reference tables.


3. In the Reference table field, enter a name for the reference table.

4. On the General tab, select the dimensions that you want to use in this reference table.

5. Click Cost accounting > Setup > Calculation > Calculation versions.

6. Click Reference table to open the Reference table values form.

7. On the Overview tab, in the list of created reference tables, click the reference table that you created in the Reference tables form.

8. On the General tab, select the dimensions that you want to enter the references for, and then enter the total reference quantity in the Reference quantity field.

9. Enter the reference quantity for each dimension that you want to allocate.

10. Confirm that the value in the Difference field is 0 (zero).

ExampleThe most common example of a reference table is the cost center building. Here, the costs are allocated by square meters, as shown in the following table.




Define a surcharge allocationOther Versions

Page 1 of 2Create reference tables [AX 2012]





Description Square meters

Total quantity of square meters 2000 m2

Square meters used by the cost center's stock 500 m2

Square meters used by the cost center's production 1 500 m2

Square meters used by the cost center's production 2 750 m2

Square meters used by the cost center's administration 250 m2

If the total costs on the cost center building are USD 1,000, the period calculation will allocate USD 250 to the cost center's stock, USD 250 to the production 1, and so on.

See alsoReference tables (form)


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Distribute costs or quantities [AX 2012]



You use distributions to distribute posted cost amounts or service quantities to other dimensions. The posted cost amounts or service quantities might or might not have a dimension. The distribution is performed on the same cost category as the original posting.

Before you can distribute costs or quantities, you must create a calculation version.

1. Click Cost accounting > Setup > Calculation > Calculation versions.

2. Select a calculation version, and then click Cost distribution.

Note

To distribute the posted service quantities, click Service distribution.

3. In the Cost line form, on the Overview tab, press CTRL+N to create a new line.

4. In the Distribution level field, select a distribution level. If you select Cost line, specify the distribution structure.

5. In the Distribution reference field, select either a cost category or a cost line, depending on the distribution level.

6. In the Calculation method field, select a calculation method.

The calculation method that you select determines how distributions are calculated. You can select from the following methods of calculation:

◦ Fixed percentage – Posted amounts are distributed to other dimensions according to the selections that you made on the Dimension tab.





Page 1 of 3Distribute costs or quantities [AX 2012]



◦ Cost category – Posted amounts are distributed to the dimensions that are posted on the cost category in this field, and they are distributed in the posted proportion. When you use this calculation method, it is appropriate to select all dimensions on the Dimension tab.

◦ Service category – Posted amounts are distributed to the dimensions that are posted on the service category in this field, and they are distributed in the posted proportion. When you use this calculation method, it is appropriate to select all dimensions on the Dimension tab.

◦ Cost line – Posted amounts are distributed to the dimensions that are posted on the cost line in this field, and they are distributed in the posted proportion. When you use this calculation method, it is appropriate to select all dimensions on the Dimension tab.

◦ Reference table – Posted amounts are distributed to other dimensions in the proportion that is set up on the selected reference table. The dimensions of the reference table are automatically updated on the Dimension tab.

◦ Reference specification – Posted amounts are distributed to other dimensions according to the selected reference quantity, and they are distributed in the proportion that is specified on the Dimension tab.

◦ Fixed amount – On the Dimension tab, a specified amount is distributed to the dimension.

7. On the General tab, select the appropriate check boxes under Cost share and Offset transaction dimension.

8. Specify the calculation method by using the fields under Offset transaction calculation.

9. Click the Dimension tab, and then enter the dimensions.

Note

The cost distributions and service distributions are calculated in the manner shown on the Overview tab in the Cost distribution or Service distribution form. The finishing order of the calculations is necessary for the result. You can change the order by using the Up and Down buttons.


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Define an internal cost allocation [AX 2012]



To allocate costs, you must first set up a calculation version. You can then select among the following three allocation types:

• Allocation

• Internal cost allocation

• Surcharge calculation

To allocate costs by using the Internal cost allocation allocation type:

1. Click Cost accounting > Setup > Calculation > Calculation versions. Click Allocations.


3. In the Allocation level field, select the allocation level. If you select Hierarchy, specify the allocation hierarchy in the Allocation hierarchy field.

4. In the Allocation reference field, type a reference.

5. In the Allocation dimension field, select an allocation dimension. The allocation dimension can be either a dimension or a division. This field is available only if you selected Dimension in the Allocation level field.

6. In the Allocation type field, select Internal cost allocation.

7. On the General tab, select Allocation account and Offset account.

8. On the Internal cost allocation tab, select the check boxes under Cost share.

9. In the Service category field, select the service category that you want to allocate. You can select only service categories for which the Use of service category field in the Cost categories form is set to Internal cost allocation.





Page 1 of 2Define an internal cost allocation [AX 2012]





10. In the Cost rate type field, select the type of cost rate for each value type.

Note

The allocations are calculated in the order shown on the Overview tab of the Allocations form. The order in which the calculations are run affects the result. To change the order, click the Up and Down buttons.

See alsoDefine a surcharge allocation


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Define a surcharge allocation [AX 2012]



To allocate costs, you must first set up a Calculation version. You can then select one of the following different allocation types:

• Allocation

• Internal cost allocation

• Surcharge calculation

To allocate costs with the allocation type Surcharge calculation, follow these steps.

1. Click Cost accounting > Setup > Calculation > Calculation versions. Select a calculation version and then click Allocations.


3. In the Allocation level field, select the current level of allocation.

4. In the Allocation hierarchy field, select the hierarchy. This field is available only if you have selected Hierarchy in the Allocation level field.

5. In the Allocation dimension field, select the dimension for the allocation. This field is available only if you have selected Dimension in the Allocation level field

6. In the Allocation reference field, select the reference for the allocation.

7. In the Allocation type field, select Surcharge calculation.

8. Click the General tab, and in Allocation account and Offset account fields, select the ledger accounts.

9. Click the Surcharge calculation tab, and select the check boxes under Cost share field group.

10. Complete the fields under Value calculation field group to specify the allocated value.





Page 1 of 2Define a surcharge allocation [AX 2012]





11. Select the relevant check boxes under Offset transaction dimension field group.

12. Click the Dimension tab, and select the dimensions in the Dimensions field group.

Note

The allocations are calculated in the order shown on the Overview tab in the Allocations form. The order in which allocations are calculated is essential to the result. To change the order, click the Up and Down buttons.

See alsoDefine an internal cost allocation


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Community Additions

Budgeting in cost accounting [AX 2012]



The topics in this section provide information about how to use budgeting in Cost accounting.

About cost accounting budgeting

About cost accounting budget models

Cost and service budgeting

Flexible budgets


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Page 1 of 1Budgeting in cost accounting [AX 2012]



About cost accounting budgeting [AX 2012]



Budgeting is a forecasting feature that enables you to plan costs for the future. It extends the budgeting functionality of the general ledger, and makes it possible to transfer budget amounts from the general ledger.

The Cost accounting module has two separate forecast functions: budgeting, which is standard functionality, and flexible planning, which is an advanced budgeting functionality and requires special licensing.

If you want to plan costs, you must first create a budget model using one of the following budget model types:

• Cost accounting budget

• Ledger budget

• Flexible budgeting

The Budget overview form provides an overview of all budget costs. To receive an overview of budget costs using all budget models, you can aggregate these budget models by linking them to each other as submodels on the Submodel tab of the Budget model form.

When you create budgets, you must distinguish between:

• Cost budget – Used to create budgets based on cost categories.

• Service budget – Used to create budgets based on service categories.

Note

This topic includes information about financial budgets. For information about budgets for projects, see About project budgets and forecasts.

About budgeting



Flexible budgets

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Page 1 of 2About cost accounting budgeting [AX 2012]





See alsoAbout cost accounting budget modelsBudget model (form)Cost and service budgetingFlexible budgets


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About cost accounting budget models [AX 2012]



Click Cost accounting > Setup > Budget model. You create various budget models to enter budget costs.

A budget model can contain many submodels that you attach to the budget model on the Submodel tab. For example, you can create a budget with submodels that represent various departments of the company.

Note

Submodels can contain other submodels. Also, if you use budget control, budget models with submodels cannot be used in the calculation of the available budget balance. For more information, see About basic budgeting and budget control setup.

In Cost accounting, there are three different types of budget models:

• Cost budget – Used for basic budgeting, such as budgeting of costs and services.

• Ledger budget – Instead of creating a special budget in Cost accounting, you can use the ledger budget.

• Flexible budgeting– Used for complex flexible budgets with planning for costs and services. You can also calculate different cost rates.

Note

Select the Stopped check box to indicate that the budget model and the budgets that are based on the budget model are blocked for modifications.

About budgeting



Flexible budgets Other Versions

Page 1 of 3About cost accounting budget models [AX 2012]



Cost accounting budgetUse the Cost accounting budget model type for standard budgeting of costs and services.

Click Cost accounting > Journals > Cost budget. You enter budget amounts for dimensions and cost categories.

In this form, only budget models of the Cost accounting budget type are available.

Click Cost accounting > Journals > Service budget. You enter budget amounts for Service categories.

Ledger budgetUse the Ledger budget model type to use a budget from the General ledger. This is useful, because you do not have to create a new budget in Cost accounting.

When you use the Ledger budget model type, you must select a specific budget from the General ledger in the Ledger budget field on the General tab.

Flexible budgetUse the Flexible budgeting model type for advanced budgeting, such as flexible planning of costs and services or planning of calculations. Before you work with the Flexible budgeting model type, you must enter the following settings:

Click Cost accounting > Setup > Budget model.

• Cost category setup

• Dimension setup

• Line structure on the General tab

See alsoAbout cost accounting budgetingAbout flexible budgets






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Cost and service budgeting [AX 2012]



The topics in this section contain information about how you can use cost budgeting and service budgeting to plan costs for cost categories and service categories.




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Page 1 of 1Cost and service budgeting [AX 2012]


> Working with cost accounting > Budgeting in cost accounting >

About cost budgeting [AX 2012]



Cost budgeting is used to budget costs for specific dimensions.

Click Cost accounting > Journals > Cost budget. Budget costs are planned for a selected budget model, which contains the dimensions.

To create a budget line, you must complete the following fields:

• Cost category

• Date

• Amount

• Method, which specifies how the budget costs are allocated for the future period

Note

If you select Period or Key in the Method field on the General tab, the Total amount field, which displays the budget costs for a certain future period, is updated automatically.

Click Budget balances in the Cost budget form to view period balances for all kinds of costs.

Click Transaction levels in the Budget balances form to modify the posting layer between the following:

• Financial accounting

• Cost accounting direct

• Cost distribution

• Allocation



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See alsoCost and service budgetingAbout cost accounting budgeting


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About service budgeting [AX 2012]



Click Cost accounting > Journals > Service budget. Budget services are planned for a selected Budget modelandFinancial dimensions.

To create a budget line, the following fields must be completed:

• Service category, which specifies the service category.

• Date, which specifies the date of the transaction.

• Quantity, which specifies the budget quantity.

• Method, which specifies how the budget quantities are allocated for the future period.

Note

The Total quantity field that displays the total budget services for a certain future period is updated automatically when you set the Method field to Period or Key as the method of budget cost allocation.

See alsoCost and service budgetingAbout cost accounting budgeting




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Flexible budgets [AX 2012]



Flexible budgets is a forecast function that extends the basic cost and service budgeting features of Microsoft Dynamics AX and gives you more flexibility in working with budgets. The most important feature is the ability to make plan calculations.

This section contains topics about how to work with flexible budgets.

Topic Description

About flexible budgets Provides general information about the creation and setup rules of flexible budgets.


Provides detailed information about how to set up a budget model with cost categories and dimensions.


Provides information about how to set up the Flexible budgeting form to transfer actual costs.

About budgeting on transactions and total amounts

Provides information about how to use flexible budgets to analyze financial performance.

Run a calculation Provides information about which cost values are calculated.


© 2017 Microsoft

Page 1 of 1Flexible budgets [AX 2012]



About budgeting on transactions and total amounts [AX 2012]



When you want to be able to analyze financial performance, you budget on transactions and total amounts by using a flexible budget.

In the Budget form, all cost categories, service categories, and cost lines are automatically displayed according to the cost category that is set up in the Budget model form. The same applies to dimensions. If specific dimensions are set up in the Budget model form, only these dimensions are displayed. Otherwise, you can select all dimensions.

In the Plan cost values form, you first fill in the Dimension and Number fields, and then you can either plan amounts for the whole year or plan a specific amount for each period.

You enter annual amounts for cost categories in the Total column in the Primary costs section. The amounts are automatically divided into 12 partial amounts, one for each month. If a period key is set up in the Cost category setup form, the amounts are divided according to the key.

To plan individual amounts for each month, you enter amounts in the columns for the months in the Primary costssection. Click Calculate to summarize monthly values in the Total values section. Be aware that this calculation is not done automatically.

You plan amounts for a service category or a cost line in the same way. You enter annual amounts in the Totalcolumn and individual amounts in the column for each the month.

The following table provides guidance for using the planning tabs in the Plan cost values form.

Cost categoriestab

• If you are planning on cost categories, first select a value in the Cost component field (either Fixed costs, Variable costs, or Full costs), and then enter plan values for the cost categories.





Run a calculation

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Page 1 of 3About budgeting on transactions and total amounts [AX 2012]




Note

If there is a calculation setup for a proportional dependency on another cost line in the Budget model form, you cannot manually enter amounts for those cost categories.

• When you have finished entering plan values, click Calculate. • To display cost balances, click Cost balance.

Service categoriestab

Budgeting on service categories works almost the same as budgeting on cost categories, except you do not have to select a value in the Cost component field. Budgeting differs depending on the type of service category. Planning on service categories of the General quantity itemizationtype is identical to planning on cost categories, because transactions are always single-entry (debit). Service categories of the Internal cost allocation type have double-entry transactions and are marked blue. You cannot plan on them directly. Instead, you enter the quantity in the lower pane of the form, which is the debit transaction, and then the credit transaction is created automatically in the upper pane.

Cost linestab

If you are planning on cost lines, specify the cost component. You can only plan on the cost lines if the Budget check box is selected for the cost line on the Cost lines tab of the Cost category setup form. (Click Cost accounting > Setup > Budget model. Click Cost category setup.) When you select this check box, all cost categories that are included in the cost line are blocked and become blue. If the Budget check box is cleared, you can only plan on cost or service categories. In this case, the relevant cost line is blocked and becomes green.

See alsoFlexible budgets


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About flexible budgets [AX 2012]



Before you create a flexible budget, you must create and set up a flexible budget model in the Budget model form.

After you set up a flexible budget model, you create a flexible budget in the Flexible budgeting form.

Note

There can be only one flexible budget per year and per budget model.

Select the following fields in the Flexible budgeting form:

• Flexible budget model – Select the budget model created in the Budget model form

• Fiscal year – Select the first date in the new fiscal year.

Note

You can select only one flexible budget per year per budget model.

• Locked –The current flexible budget is not considered for the calculation.

• Calculated –The calculation for this flexible budget was performed.

• Calculation version – You must create and set up a new calculation version specifically for the flexible budget. It is important to select the following value types:





Run a calculation

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Page 1 of 2About flexible budgets [AX 2012]





◦ Basic plan costs

◦ Flexible plan costs

◦ Target costs

The Flexible budgeting form contains the following buttons:

Button Description

Plan values Enter the plan values.

Workload Enter the percentage of load.

Calculation Run the plan calculation batch job.

Transfer balances Copy the actual costs in the flexible budget.

See alsoAbout setting up a budget model for flexible budgetsTransfer actual costs in a flexible budgetAbout budgeting on transactions and total amountsRun a calculation


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About setting up a budget model for flexible budgets [AX 2012]



You set up the budget model for a flexible budget in the Budget model form. Select Flexible budgeting in the Budget model type field. When you select this type of budget model, you have the following options:

• To set up dimensions manually by clicking the Dimension setup button, select the Check dimensions check box on the General tab. Otherwise, the dimensions are available in the dimension setup when plan values have been entered in the flexible budget.

• To set up the cost categories, service categories, and cost lines to plan on, click Cost category setup.

• To set up the dimensions to plan on in the flexible budget, click Dimension setup.

Cost category setupUse the Cost category setup form to specify the cost categories, service categories, or cost lines that you want to plan on in the flexible budget. These are displayed automatically in the flexible budget. You must decide whether the planning of costs is based on cost categories or cost lines.

If planning is based on cost lines, select the Budget check box for the required cost lines on the Cost lines tab of the Cost category setup form. If you do this, you cannot plan on the cost or service categories that are included in these cost lines.

The cost and service categories are displayed in blue in the flexible budget, and you cannot enter values for them.

Cost categories tab





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Page 1 of 4About setting up a budget model for flexible budgets [AX 2012]


On the Cost categories tab, enter the cost categories to plan on and select a period key for each cost category. If you leave the Period key field blank, the planning on this cost category is linear. You set up period allocation keys in the Period allocation key form in General ledger.

If an entry was made in the Calculation setup form for this cost category, the Calculated check box is selected. This means that the plan value for this cost category is calculated from the plan values of the other cost category.

Click Load cost categories to create a query to enter the cost categories automatically. This is especially useful if you are entering all cost categories. You can still modify the list of cost categories after you load it.

Click Calculation setup to use the Calculation setup form, in which you can implement a proportional dependency on another cost category. This means that the plan value in the flexible budget is not entered manually. Instead, it is calculated according to this calculation setup as a percentage of another plan value. Select a cost category in the Cost category field and enter a percentage in the Percent field. You can also select the Invert sign check box to indicate that the calculated plan value has the opposite sign from the typical planned value.

Service categories tabOn the Service categories tab, enter the service categories to plan on and select a period key for each service category. If you leave the Period key field blank, the planning on this service category is linear.

Click Load service categories to create a query to enter the service categories automatically. This is especially useful if you are entering all service categories.

You can modify the list of service categories after you load it.

Cost lines tabOn the Cost lines tab, enter the cost lines to plan on, and select values in the following fields for each cost line, as appropriate:

• Select the Budget check box to base the costs on a cost line instead of planning values on the cost categories that are included in this cost line.

• Select a period key. If you leave the Period key field blank, the planning on this cost line is linear.

• To use this cost line for planning, use the Share fixed costs and Share variable costs fields to define cost shares for the cost line.

• If an entry was made in the Calculation setup form for this cost line, the Calculated check box is selected. This means that the plan value for this cost line is calculated from the plan values of the other cost line.

• Click Calculation setup to open the Calculation setup form, in which you can implement a proportional dependency on another cost line. This means that the plan value in the flexible budget is not entered manually. Instead, it is calculated according to this calculation setup as a percentage of another plan



value. In the Calculation setup form, select a cost line in the Cost line field and enter a percentage in the Percent field. You can also select the Invert sign check box to indicate that the calculated plan value has the opposite sign from the typical planned value.

• Click Cost allocation to open the Cost allocation form, in which you can define, as a percentage, how the planned costs that are based on this cost line are allocated among the cost categories that are included in this cost line. If a cost allocation is not defined, all planned costs that are based on the cost line are allocated to the first cost category that is included in this cost line.

Dimension setupUse the Dimension setup form to specify the dimensions to plan on in the flexible budget. You can select dimensions manually only if the Check dimensions check box on the General FastTab of the Budget model form is selected. Otherwise, each dimension is automatically displayed in the Dimension setup form when plan costs have been entered for the dimension in the flexible budget.

When you enter dimensions, you must select values in the following fields for each dimension:

• Dimension – The type of dimension.

• Number – The dimension number. If no number is selected in this field, the costs can be planned without a defined dimension. These costs can later be distributed on dimensions by using the cost distribution.

• Locked for journal – If this check box is selected, you cannot plan on this dimension in the flexible budget.

• Determination of load – If you are working with a workload in the flexible budget, you can select whether to enter data manually or to have data be loaded automatically.

• Service category – This check box is selected when the Determination of load field is set to service category.

To delete plan costs for a specific dimension, delete the dimension in the Dimension setup form. All plan costs for this dimension are deleted automatically in the flexible budget.

See alsoFlexible budgets







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Transfer actual costs in a flexible budget [AX 2012]



Click Cost accounting > Journals > Flexible budgeting. On the Transfer balances form, click the Transfer balances button.

Enter the following information on the General tab before you run the transfer of balances:

• Forecast model – Select the budget model that the balances are to be transferred into. Select the Overwritecheck box if all existing budget values in the selected budget model should be removed before the transfer of balances.

• Period – Select Date interval code or From date and To date of balances to be transferred into the flexible budget.

• Change – Specify the time shift of the balances. The Quantity field defines the number of time units for time shift. The Unit field defines the units for time shift (days, months, years). The From date and To date fields display the automatically updated date interval for the transfer.

• Rules – Specify the factor and round-off for cost balances. Factor increases the existing transaction amounts by this factor.

• Area – Define which types of values to transfer: Fixed costs, Variable costs, and Services.

• Financial dimensions – Define which dimension balances to transfer by selecting the appropriate dimensions.

• Create settings automatically – Define whether to create flexible budget settings automatically and to transfer balances for cost categories, service categories, and dimensions defined in the flexible budget model setup.





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Run a calculation [AX 2012]



1. Click Cost accounting > Journals > Flexible budgeting.

2. In the Flexible budgeting form, click Calculation to calculate plan costs. The following cost value types are calculated:

◦ Basic plan costs

◦ Flexible plan costs

◦ Target costs

The concept resembles the period calculation that is used for actual and budget costs.

Before you run a calculation, you must create distributions, allocations, or cost rate calculations by using the calculation version that is set up specifically for the flexible budget. The calculations are based on the plan calculations.






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Community Additions

Journals and posting in cost accounting [AX 2012]



The topics in this section provide information about how to use journals and posting in Cost accounting.

About journal names

Create a cost journal

Create a service journal

Create a cost accounting accrual scheme



© 2017 Microsoft

Page 1 of 1Journals and posting in cost accounting [AX 2012]




About journal names [AX 2012]



Journal names are the templates that you select from when you create journals for cost transactions and service transactions. You can create journal names in the Journal names form.

Click Cost accounting > Setup > Journal names. For more information, see Journal name (form)

You can create two types of journals:

• Cost – This type of journal is used for cost transactions.

• Services – This type of journal is used for service transactions.

In addition to selecting the journal type, you must enter other information when you create a journal name, including information about posting, approval, offset transactions, and voucher series.

See alsoCreate a cost journalCreate a service journal


About journal names





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Create a cost journal [AX 2012]



A cost journal is used to create and post cost transactions. Before you enter and post cost transactions, you must create a cost journal by using one of the journal names that is created in the Journal names form (Click Cost accounting > Setup > Journal names.)

1. Click Cost accounting > Journals > Cost transactions.

2. Press CTRL+N to create a new line, and then select the appropriate journal name in the Name field.

3. Click Lines.


5. Enter all information about the transaction.

6. Press CTRL+N to create additional lines.

7. Click Validate and then Validate to validate the transactions.

8. Click Post and then Post to post the transactions.

Note

You can only use the journal that you have created to post cost transactions. To post service transactions, use the Service transactions form.

See also

About journal names





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Create a service journal [AX 2012]



The service journal is used to create and post service transactions. Before you can enter and post the service transactions, you must create the cost journal. You create the cost journal by using one of the journal names that you created in the Journal names form. (Click Cost accounting > Setup > Journal names.)

1. Click Cost accounting > Journals > Service transactions.

2. Press CTRL+N to create a new line, and then select the appropriate journal name in the Name field.

3. Click Lines.


5. Enter all information about the transaction.

6. Repeat steps 4 and 5 for each transaction that you want to add to the journal.

7. Click Validate and then Validate to validate the transactions.

8. Click Post and then Post to post the transactions.

Note

You can use this journal to post only service transactions. To create cost transactions, use the Cost transactionsform.

See also

About journal names





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About journal namesService transactions (form)


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Create a cost accounting accrual scheme [AX 2012]



1. Click Cost accounting > Setup > Accrual schemes.


3. In the Accrual identification and Description of accrual scheme fields, enter the appropriate information.

4. On the General tab, define the posting rules and duration of the accrual scheme.

5. Close the form to save your changes.

See alsoCost accounting accrual schemes (form)Accrual (form)Create cost accounting accrual transactionsAccrual schemes (form)


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Create cost accounting accrual transactions [AX 2012]



1. Click Cost accounting > Journals > Accruals.

2. In the Voucher field, select the voucher that you want to accrue.

3. View the information in the Amount fixed field or the Amount variable field.

4. Click the Accruals tab, and then in the Accrual identification field, enter the identification code of the accrual scheme.

5. In the Start date field, select the date of the first accrued transaction. The End date field is filled in automatically, based on the configuration of the accrual scheme.

6. Close the form to save your changes.

Note

You can verify the accrual transactions in the lower pane of the Accruals form.

See alsoAccrual (form)Cost accounting accrual schemes (form)Create a cost accounting accrual scheme

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Microsoft Dynamics AX reports [AX 2012]Updated: February 4, 2013


Use the following information to learn more about the reports that are provided with Microsoft Dynamics AX.

How to obtain help for a reportFor detailed descriptions of the default reports that are provided with Microsoft Dynamics AX, see the Reports Catalog on the Microsoft TechNet website.

How to work with reportsThe following topics explain how to print a report and how to filter and sort the data on a report:

• Print or email a report

• Filter the data on a report

• Sort the data on a report

How to create a custom reportThe following topics explain how to create a new, custom report:

• Create a report by using the Microsoft Dynamics AX auto-report wizard

• Create a report by using the Excel data connection wizard to connect to a cube

• Create a report by using SQL Server Report Builder to connect to a cube

• Create a report by using Power View to connect to a cube

How to learn where the data on a report comes from

Page 1 of 2Microsoft Dynamics AX reports [AX 2012]


Community Additions

If you are a developer, you can learn more about where the data on a report comes from by using the following procedure:

1. Open the Microsoft Dynamics AX Application Object Tree (AOT).

2. Expand the SSRS Reports > Reports node.

3. Right-click a report. Click Add-Ins > Cross-reference > Using (instant view).


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Page 2 of 2Microsoft Dynamics AX reports [AX 2012]


Roadmap for Cost Accounting [AX 2012] - AXUG

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