Product cost
Production cost estimation and post-calculation
For every work order you see what it should have cost and what it really cost.
Etrust PIS calculates the pre-calculation from the BOM and routing, and the post-calculation from actually issued material, work center and worker time recorded at the control center, and subcontracting costs. The difference between planned and actual product cost is visible per order, operation and cost type.
Flow
From BOM to inventory value
- BOM and routing
- Pre-calculation
- Work order
- Start & Stop on the shop floor
- Post-calculation
- Own cost price list
- Inventory valuation
Challenges
Challenges you know
- The product cost was calculated once in Excel and is never updated.
- Nobody knows whether an individual order really made money.
- Deviations from standards are noticed only at year end.
- Shop-floor hours are recorded for productivity but never reach the product cost.
- With partial completion of an order, the cost per piece is distorted.
Solution
How Etrust PIS calculates
- Pre-calculation from BOM and routing
Material, work centers, labour and subcontracting are calculated from the BOM and routing, for a work order or a BOM, recursively through all subassemblies if needed. The material price source is set per item type.
- Post-calculation of every work order
Post-calculation is computed for every Start & Stop record: actually issued material, work center costs for the actual time, costs of the workers who worked, subcontracting and manually added material. The result is per operation and in the order header.
- Shop-floor hours in the cost
The time a worker reports at the control center is not just productivity data; it goes straight into the order post-calculation together with the work center and worker rates.
- Partial completion: planned and produced
When fewer pieces are produced than planned, the cost is calculated per produced piece, and the Planned and Produced view shows the difference in amount. Subcontracting is spread over the pieces of the subcontracted operation.
- Comparison with pre-calculation
Because pre-calculation and post-calculation are made for the same work order, you see the difference between planned and actual product cost by material, labour, work centers and subcontracting.
- Own cost price list
For every product and semi-finished product you see the lowest, highest and average price from pre-calculations and post-calculations. Update the price list with one click; previous prices stay in the history.
- FIFO inventory valuation
Inventory is valued with the FIFO method by periods that you close in sequence. Receipt prices come from configurable price rules (own cost price list, purchase price list, last supplier receipt), and every calculation has a log.
Frequently asked questions
Product cost in brief
What is work order post-calculation?
Post-calculation computes the actual costs of a work order after the work is done: material consumed, work center and worker time, and subcontracting. Comparison with the pre-calculation shows whether the product cost what was planned.
Where do the hours in post-calculation come from?
From shop-floor data capture. The worker reports operation start and finish at the control center, and Etrust PIS multiplies the time by the work center and worker costs for that period.
How is the cost calculated when fewer pieces are produced than planned?
The cost is calculated per produced piece. The Planned and Produced view shows the amount for the planned quantity and the amount for the pieces actually produced.
How is inventory valued?
With the FIFO method by periods. Receipt prices are set by price rules that you configure per item type, for example the own cost price list for products and the last valued supplier receipt for material.
We show you on your own work order. Material, two operations, subcontracting and a deviation from standard: from pre-calculation to post-calculation in 30 to 45 minutes.
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