Estimation provides you with the projected material and capacity consumption costs of producing an item in the planned production order quantity. It is a mandatory step in the production process, and is conducted after the production order is created. Its essential function is to estimate item and route consumption in connection with the production process, because these estimates form the basis for subsequent scheduling and production processes.
Viewing the
outcome of the estimate
After you run estimation, you can see the results in the form ( > > > ).
The estimation run calculates the following values:
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Production cost– This is the top line of the estimate. It shows the complete cost of running the production order and the total sales price for the production. It is the sum of all the cost lines on the estimate.
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Route or work center costs– These are the costs for the operations involved in a production, including elements such as setup time, run time, and overhead.
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Material costs– These are the costs and prices of the bill of materials (BOM) components needed to produce the item. These have been previously established and entered into the system.
Other uses of
a cost estimate
A cost estimate also provides:
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Meaningful price quotations.
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Estimates of the profitability of the order.
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Estimates of raw material usage.
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Comparisons of cost information from previous productions.
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Budget and forecasting information.
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Estimates of the production size required to maintain a particular cost.
