Overview
Derive Purchase Mtl Costs from PO Activity is the program that calculates the PO Item Cost > Std Material Cost for those purchased items whose Std Cost Update Ind set to ‘Calculate’. When an item's Purchase Item Cost > Std Cost Update Ind field is set to ‘Manual’, that record will not be processed by the program.
Application
The Purchase Item Cost > Standard Material Cost value is the source value used to populate the Inventory Item Standard Cost > Simulated Purchase Price field.when the Set Sim Purch Price From PO Derived Cost function is selected. It is the Inventory Item Std Costs > Simulated Purchase Price field value that is source of the material cost of a purchased item in a Simulated Cost Rollup.
Navigation
Derive Purchase Mtl Costs from PO Activity
Processing
Fields
Division: The Division for which this program update is to be run.
Select the Submit button to initiate the program.
Logic for the Calculation of the Purchase Item Cost > Std Material Cost
1. For each Purchase Item Cost Record in the specified Division whose Std Cost Update Ind field is set to ‘Calculated’, the following logic is performed:
The item's Purchase Commodity Code record is accessed for the following field values.
Weighting Factors: Two fields on the Purchase Commodity Code record are the source of the weight factors applied to the Purchase Item Cost Current and Historical Average Cost values.:
Historical Costs Weight Factor: The Historical Average Cost will be multiplied by this factor (providing this factor is greater than zero).
Current Costs Weight Factor: The Current Average Cost will be multiplied by this factor (providing this factor is greater than zero).
NOTE The two Weight Factors added together must equal 1.0. . A valid value either field is zero. When the Current Costs Weight Factor is greater than the Historical Costs Weight Factor, the Current Avg Cost value is given more weight than Historical Avg Cost. When the Current Costs Weight Factor is less than the Historical Costs Weight Factor, Historical Avg Cost is given more weight than Current Avg Cost.
Std Cost Markup/Down: The value may be zero. When not zero, the value is multiplied times the value which results from the Current and HIstorical Avg Costs being multiplied by their respective weight factors. The resulting value is the Purchase Item Cost > Std Material Cost value.
EXAMPLE A mark-up is entered as .2 (20%). A mark-down is entered as -.2 (-20%).
Calculation Example
Step 1. Calculate using the Current and Historical Avg Costs and the PO Commodity Code Weight Factors.
The Historical Average Cost is $2.00 and the Current Average Cost is $3.00.T
Then:
60% weight to historical average, the Historical Costs Weight Factor = .6
40% weight to current average, the Current Costs Weight Factor = .4
Calculation is:
($2 historical x .6) + ($3 current x .4)
( $1.20) + ($1.20)
$2.40
Step 2. Applying the Std Cost Markup/Down
The cost of the material Cost is expected to increase by 10%.
Std Cost Markup/Down field = (.1)
The cost calculated using the Weigh Factors is multiplied by the Mark Up/Down
(2.40 x .1) = $2.64.
SEE ALSO
