A manufactured item's constant costs reflect the operation setup times and the components with 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. The costing lot size concept has several synonyms, such as accounting lot size. The concept of amortizing constant costs also has several synonyms, such as proportional constant costs.
The costing lot size quantity for a manufactured item is used in a 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 default for its costing lot size, but the default may 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 defaults to the item's standard order quantity, but it can be manually overridden. The specified calculation quantity represents the costing lot size for the specified item, and for manufactured components with a bill of material (BOM) line type of production (because it is assumed that the component will be produced to the exact quantity). The costing lot size for other manufactured components (with 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 with 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 defaults to 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 miscellaneous charges.