Multilevel BOMs 

Definition

BOM containing materials that have their own BOMs.

Use

The system assigns a low-level code (from the Logistics view) to each level of the BOM. The following figure shows a multilevel BOM and its low-level codes.

The system explodes the BOM from top to bottom (low-level codes), and assigns costing levels (from the costing view). The following figure shows a multilevel BOM and its costing levels:

The costing levels determine the sequence in which the cost of goods manufactured for each material is calculated. The system first calculates the costs for the materials with the lowest costing level (no. 0 in the figure). Then it calculates the costs for the materials (semifinished products) in the next highest level (1) including the costs that it calculated for the materials in the subordinate costing level.

This ensures that the costs for all assemblies and all raw materials or purchased parts are included in the costs calculated for the end product. This process is called cost rollup. A cost component split is created for each assembly costed, grouping the costs into, for example, material costs, production costs, and overhead. An initial cost split can be created for raw materials or purchased parts, splitting the procurement costs.

When you store the cost estimate for the end product, you also store a cost component split for each level of the cost estimate. This enables you to analyze the value added for each production level.

See also:

For more information, see the following sections in the R/3 Library:

PP BOMs

Assemblies