Manufacturing environments involve maintaining standard costs for purchased and manufactured items, which 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. These guidelines assume the use of a separate costing version to contain the next period's standard costs. Pending cost records for all items will be entered in this costing version.

1. Define the costing version for the next period by using the Costing version setupform. Guidelines for this costing version include:

   • Assign a costing type of standard costs.

   • Assign a meaningful identifier to the next period's costing version, such as 2009-STANDARD (assuming that 2009 is the next frozen period).

   • Ensure that 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. Entering a site will limit the entry of cost records to the specified 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 in the next frozen period.

   • Indicate a fallback principle of none.

2. Analyze the need to change standard costs for items. Use the Standard cost variance analysisreport to analyze 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 within 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.

   As an alternative, you can automatically enter costs by copying item cost records, which can then be maintained by using the Priceform. Use the Copy costing versionform to copy active item cost records (for standard costs) into the next period's costing version. Employ the option to copy active costs when you have 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.

   Item cost records can be selectively copied, and the copy process can be performed multiple times, to populate the next period's costing version. Existing costs can be selectively changed by a factor or amount, and existing miscellaneous charges can also be changed by a factor or amount.

4. Review item cost records within the costing version by using the Item pricesreport. Verify the completeness and accuracy of item cost records.

5. When you use routing information for costing purposes, use the Cost category priceform to enter cost records within the next period's costing version to define the hourly rate (or piece rate) that is applicable 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 cost records within the next period's costing version for completeness and accuracy. Use the Cost category ratesreport to review a list of cost records for cost categories.

7. When calculating manufacturing overheads, use the Costing sheet setup form to enter the indirect cost calculation formulas 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 costing sheet setup. Correct any errors that are identified by the validation process.

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

10. Calculate the cost of all manufactured items by using the BOM calculationform. You can open the BOM calculationform from the Costing version setupform, and by selecting the next period's costing version.

11. Review 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 BOM calculationreport to review a list of the calculated costs.

12. Use the Costing versions 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 within the next period's costing version on the first day of the next period, but not beforehand. Use the Activate pricesform, which you can open from the Costing version setupform for the next period's costing version. The pending cost records for individual items can also be activated by using the Price form and by clicking the Activatebutton.

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

14. Use the Costing version setupform to change the blocking flags within the next period's costing version to prevent further data maintenance.

Repeat the steps in this procedure each time that you need to enter and activate costs for a new period.