Cost estimate of a BOM for a sales order item. This cost estimate is created outside the sales order. Order BOM cost estimates are supported for all individual requirements materials in the BOM structure.
Order BOM costing is recommended in complex make-to-order production. Complex structures that are gradually established over time do not have to be completely exploded to be costed. Instead, they can be costed in sections. Individual assemblies can be costed as early as the design phase, before the structure of the finished product is finalized.
Order BOM cost estimates thus enable materials to be costed from the bottom up during the design process in complex make-to-order production environments.
Order BOM costing can be used for inventory valuation of materials manufactured for sales orders. The inventory of individual material components can therefore be valuated using order BOM costing even before the design of the finished product has been finalized.
Creating order BOM cost estimates and then transferring them into sales order cost estimates can significantly improve the performance of sales order costing.
Order BOM cost estimates also enable the planned costs for the sales order item to be updated in multiple valuation views. In this case you first create the sales order cost estimate. To do this, you create a maximum of twoorder BOM cost estimates (in addition to the sales order cost estimate) with their own costing variants for the same sales document item.
You must define the costing variant in Customizing for Product Cost Controlling under Cost Object Controlling ® Product Cost by Sales Order ® Preliminary Costing ® Costing Sales Order Items with Product Costing ® Costing Variants for Product Costing ®Check Costing Variants for Product Costing.
You specify in the costing variant whether you want to transfer order BOM cost estimates. Order BOM cost estimates are only transferred if they were created with the same costing variant. You therefore use the same costing variant for sales order costing as for order BOM costing.
In contrast to sales order costing, order BOM costing takes place outside the sales order. Order BOM cost estimates are created outside the sales order.
The initial material for costing can be any material below the sales order item, including the material on the sales order item. The cost estimate is created with reference to the sales order item.
When you create order BOM cost estimates for higher-level assemblies and sales order cost estimates, you can transfer cost estimates of sales-order-based assemblies. Whether order BOM cost estimates for assemblies are included in the sales order cost estimate or in an order BOM cost estimate for a higher-level assembly is controlled in Customizing in the costing variant. If you have specified in the costing variant that you want to transfer order BOM cost estimates, when you create a higher-level order BOM cost estimate or sales order cost estimate the system first searches for an order BOM cost estimate before it explodes an assembly.
Transferring order BOM cost estimates can significantly improve performance when costing sales order items.
The system always updates the cost component split for the order BOM cost estimate. When you save the cost estimate, you can choose whether you also want to save the itemization. You can also specify in the costing variant whether you want the itemization to be updated. If the standard price for the valuated sales order stock is based on an order BOM cost estimate and you want to calculate variances, scrap, or work in process at target costs, make sure that an itemization exists for the cost estimate.
Standard Price on Basis of Order BOM Cost Estimate
When you are using a valuated sales order stock, the standard price for the individual requirements material can be calculated in an order BOM cost estimate. The individual requirements material is valuated on the basis of an order BOM cost estimate in accordance with the settings in the requirements class using the strategy for standard price calculation with a valuated sales order stock. The valuation is made at the time of the first goods receipt for the material. A requirement is that the order BOM cost estimate is marked. You mark the cost estimate when you create the order BOM cost estimate. The semifinished products in the multilevel BOM for a sales order item can be valuated even before the structure of the finished product is finalized.
Purpose of Sales Order Costing
If you have created an order BOM cost estimate for the finished product in the sales order item, you should still create aproduct cost estimate for the sales order item. When a sales order cost estimate is created, this has the following effects:
These functions are not performed through an order BOM cost estimate.
A costing run for multiple order BOM cost estimates that are not linked to each other is not supported.
If a subordinate assembly in a multilevel BOM for a sales order item is changed and costed, this has no effect on the cost estimate of the higher-level assembly. If you change assemblies, you must take organizational steps to ensure that all relevant cost estimates are organized.
User-Defined Error Management
You can influence the messages output in the log of order BOM costing by usinguser-defined error management.
For information on standard price calculation with valuated sales order inventories, see the following section:Standard Price with Valuated Sales Order Stock
For information on updating costing data, refer to the following section:Update of Planned Costs
For information on updating data in multiple valuation views, refer to the following section:Transfer Prices in Cost Object Controlling